CVR-no: 49 61 98 12 | Lautrupsgade 7 , 5
th
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Annual Report
2021
Our promises
Partners in Wall Building
As your trusted partner, H+H delivers
industry-leading customer excellence and
a comprehensive product portfolio. We
provide innovative solutions to all of our
partners’ building needs from design and
planning to delivery, assembly and problem
solving.
We understand wall building and have a
comprehensive product range to provide
strength as well as thermal and acoustic
insulation to meet all of your construction
needs.
We understand your requirements and
strive to build better living and working
places for our communities.
Performance focus
H+H is driven to deliver results.
Performance starts with our health and
safety and permeates through the whole
business. From quality products, customer
journey, manufacturing excellence and
continuous process improvement to our
financial and ESG results delivered through
our engaged workforce.
Our performance is ethical as we comply
with legislation and strive to serve and
enhance the communities in which we
oprate. This commitment is embodied in
our policies and procedures that underpin
our performance.
Pushing the boundaries
The construction industry is continually
evolving and as a market leader, we are
curious and eager to push the boundaries.
We have developed products with
improved thermal and acoustic properties
to enable improved homes and workplaces.
Our innovation in Modern Methods of
Construction has significantly enhanced
building eciency and we continue to
explore further product properties and
applications to meet future needs.
To service our partners, we stay committed
to present more than a simple product
oering and it continues with our work on
digital engagement for the benefit of our
partners.
Protecting the planet
Protecting the planet is key to all of our
futures and at H+H, we take this challenge
seriously.
Our products are environmentally friendly
as they are recyclable, long-lasting and
thermally insulating. We help to reduce
energy needs in homes and buildings.
We have been improving the energy and
waste eciency in our production process
over many years, and we have committed
to ambitious science-based emissions-
reduction targets with a roadmap to reach
carbon neutrality by 2050.
Furthermore, we support the UN
Sustainable Development Goals focusing
on Sustainable Cities, Responsible
Consumption and Production.
People driven
People are at the heart of H+H.
The health and safety of all of our sta,
suppliers, service providers and customers
is our primary focus which will never be
compromised as we strive towards zero
harm.
We value our workforce, recognise the
advantages of diversity and believe in the
equality of people. Empowered by a culture
built on collaboration and trust, we provide
development opportunities which enable
our employees to reach their potential and
deliver this as a competitive advantage to
our customers.
Management’s review | H+H introduction
3 | H+H Annual Report 2021
1909
Henriksen &
W. Kähler established
joint gravel pit
enterprise
1937
Business
expanded with
Danish Aircrete
and Rockwool
Partnership
2011
Michael T. Andersen is
appointed CEO of H+H
2021
Acquisitions of one
AAC factory and
one combined AAC
and CSU factory in
Germany
2000
Focus on
aircrete—expansion to
Finland and Germany
2019
Divestment of the
Russian business
and acquisition of
one CSU factory in
Germany
1958
H+H enters the
UK—joint venture
with Celcon
1962
Henriksen & W. Kähler
divided Rockwool
activities from the
other activities
2009
Opening of factory
near St. Petersburg,
Russia
1985
H+H’s B shares listed
on the Copenhagen
Stock Exchange
2017
H+H enters the CSU
markets through
acquisitions in
Germany, Switzerland
and Poland
2019
Peter Klovgaard-
Jørgensen is
appointed CFO
2005
Expansion into
Poland
2015
Restructuring of the
Polish aircrete market
2020
Acquisition of
one AAC factory
in Germany
2013
Kent Arentoft is
appointed
Chairperson of the
Board of Directors
H+H as a
conglomerate
1909 –1998
H+H as a
consolidator
1998 –2021
H+H as a
consolidator
2021
Turnaround
2011– 2015
Restructuring
of the European
white-stone
markets
2015– 2021
More than 100 years
of experience
Management’s review | Governance
104 | H+H Annual Report 2021
Table of Contents
Management's review Financial statements Other 2021 reports
Introduction 5
H+H at a glance 6
Equity story 7
Performance highlights 2021 8
Five-year summary 9
Sustainability highlights 10
Global megatrends 11
Letter from the Chairman 12
Letter from the CEO 14
Financial outlook 16
Our business 17
Business model 18
Partners in Wall Building 19
Products and solutions 20
Corporate strategy and growth platform 21
Our geographical footprint 25
Central Western Europe 26
The United Kingdom 29
Poland 31
Financial policy and capital allocation 33
Sustainability 34
H+H Sustainability Strategy 35
H+H science-based targets 36
People 37
Organisation and people 38
Safety 40
Strategic targets 41
Summary of strategic targets 41
Performance 42
A word from the CFO 43
Full year 2021 financial review 44
Q4 2021 key figures 46
Q4 2021 results 47
Governance and shareholder information 48
Corporate Governance 49
Board of Directors 52
Executive Board 54
Risk and risk management 55
Shareholder information 58
Financial statements 60
Income statement 61
Statement of comprehensive income 61
Balance sheet 62
Cash flow statement 63
Statement of changes in equity 64
Notes to the consolidated
financial statements 65
Notes – Financial statements 66
Notes – Income statement 69
Notes – Balance sheet 76
Notes – Supplementary information 91
Statement by the Executive Board and
the Board of Directors 97
Independent auditors’ report 98
Contact information 102
H+H Oces 102
H+H history 103
More than 110 years of experience 103
Sustainability report
www.hplush.com/sustainability-reports
Remuneration report
www.hplush.com/remuneration
Corporate Governance statement
www.hplush.com/corporate-governance-reports
14
Letter from the CEO
103
History
42
Performance
Management’s review | H+H introduction
4 | H+H Annual Report 2021
contents
The Annual Report of H+H
International A/S comprises
consolidated financial statements
prepared in accordance with
International Financial Reporting
Standards ("IFRS") as adopted by
the EU and further requirements
in the Danish Financial Statements
Act and Parent Company
Financial Statements prepared
in accordance with the Danish
Financial Statements Act.
Forward-looking statements
The Annual Report contains forward-looking
statements. Such statements are subject to
risks and uncertainties, as various factors, many
of which are beyond the control of H+H, may
cause actual developments and results to dier
materially from the expectations expressed in
this document. In no event shall H+H be liable for
any direct, indirect or consequential damages or
any other damages whatsoever resulting from
loss of use, data or profits, whether in an action of
contract, negligence or other action arising out of
or in connection with the use of information in this
document.
Comparative figures
Unless otherwise stated, all figures in parenthesis
refer to the corresponding figures in the prior year.
INTRODUCTION
H+H at a glance
Equity story
Performance highlights 2021
Five-year summary
Sustainability highlights
Global megatrends
Letter from the Chairman
Letter from the CEO
Financial outlook
Management’s review
5 | H+H Annual Report 2021
introduction
H+H at a glance
H+H is a leading provider of solutions and materials for wall building. Over the recent years, H+H
has grown significantly through acquisitions and now has a strong and diversified market position
across its geographies, serving as a solid foundation for continued growth.
Founded in
1909
H+H was established in 1909
when Henrik Johan Henriksen
and Waldemar Kähler
established the joint stone
and gravel-pit enterprise,
'
Singelsforretningen Omø
'.
Employees
1,663
We have more than 1,600
employees working across
eight dierent countries in
Northern and Central Europe,
of which approximately two
thirds work in our factories.
Factories
31
We have 31 factories across
Northern and Central Europe
with a total annual output
of close to 4.5 million cubic
metres of wall-building
materials. In addition, we
are currently expanding one
of our AAC factories in the
northern part of Poland with
a new CSU production line.
Acquisitions
24
Since 2014, we have acquired
24 factories. These have
contributed to a significant
expansion of our factory
network and have more
than tripled our white-stone
businesses in both Germany
and Poland.
Revenue split by product line (FY 2021)Revenue (DKKm)
3,020
In 2021, we generated a total
revenue of DKK 3,020 million
and an organic growth of 13%.
AAC and CSU accounted for
71% and 29% of the total
revenue, respectively.
29%
Calcium silicate ("CSU")
is a heavy and dense wall-
building material primarily
used for residential high-rise
buildings. The product is fire
resistant and has a very high
degree of sound insulation.
71%
Aircrete ("AAC")
combines strength and
durability with fire resistance,
low weight and excellent
thermal insulation making it the
ideal material for the residential
low-rise housing market.
Both products are key components for energy-ecient
wall systems.
Management’s review | H+H introduction
6 | H+H Annual Report 2021
hh at a glance
Equity story
H+H remains in a unique position for continued growth due to attractive
market fundamentals, a dierentiated market approach, sustainable
products and a proven track record of strategy execution.
Unique market conditions
for growth
• Structural under-supply of housing
• Government commitment and stimuli programmes
for housebuilding
• Demographic growth and changing housing needs
• Fragmented markets with room for consolidation
through acquisitions
• High entry barriers for new competitors
Dierentiated market
approach
• Value-added customer relationships and assistance
through entire building process
• Supplying sophisticated and sustainable solutions
• High degree of market adaptability
• High customer retention rate
Sustainable solutions
—net-zero emissions by 2050
• Long-lasting and recyclable products
• Carbon-friendly products with increasing market
penetration
• Insulating properties leading to energy savings and
more sustainable buildings
• Excellent indoor climate, fire resistance and acoustic
comfort
• Commitment to ambitious 1.5-degree emissions-
reduction target
Proven track record of
strategy execution
• European market-leading position in AAC and CSU
products established through M&A
• Consolidation of fragmented markets continues to
provide attractive synergies
• Ecient integration process and agile organisation
• Return on Invested Capital ("ROIC") consistently
above WACC
• Strong cash-flow generation to fund continued
growth
Management’s review | H+H introduction
7 | H+H Annual Report 2021
equity story
Performance highlights 2021
DKKm Ratio
0
120
240
360
480
600
2017 2018 2019 2020 2021
0.0
0.5
1.0
1.5
2.0
2.5
DKKm %
0
400
800
1,200
1,600
2,000
2017 2018 2019 2020 2021
0
4
8
12
16
20
DKKm
0
70
140
210
280
350
2017 2018 2019 2020 2021
DKKm %
0
200
400
600
800
1,000
2017 2018 2019 2020 2021
0
7
14
21
28
35
0
600
1,200
1,800
2,400
3,000
DKKm %
2017 2018 2019 2020 2021
-8
0
8
16
24
32
DKKm %
0
80
160
240
320
400
2017 2018 2019 2020 2021
0
3
6
9
12
15
Invested capital and ROIC excluding goodwillNet interest-bearing debt and financial gearing
3
Profit after tax
Note: In 2018, ROIC was adversely impacted by a one-o related to the acquisition and inte-
gration of the German and Polish businesses as well as impairment of fixed assets in the now
divested Russian business. Adjusted for these eects, ROIC would have been 17%.
3
Net interest-bearing debt to EBITDA before special items ratio.
Note: Net interest-bearing debt for 2019 onwards include the impact from IFRS 16
321 0.6x 20%
Profit after tax Net interest-bearing debt
Financial gearing
Invested capital
Return on Invested Capital
EBIT and EBIT margin before special items
2
Gross profit and gross margin before special items
1
Revenue
2
Please refer to note 6 "Special items, net" for a description of special items
Note: EBIT in 2018 was aected by a one-o eect related to the acquisition of the German CSU plants
1
Please refer to note 6 "Special items, net" for a description of special items
3,020 30% 14%
Selected financial figures and ratios
Revenue
Organic growth
Gross profit before special items
Gross margin before special items
EBIT before special items
EBIT margin before special items
Management’s review | H+H introduction
8 | H+H Annual Report 2021
performance highlights 2021
Five-year summary
Income statement
(DKK million) 2021 2020 2019 2018 2017
Revenue 3,020 2,654 2,840 2,523 1,622
Gross profit before special items 905 836 877 690 452
EBITDA before special items 591 521 539 410 242
EBITDA 567 521 531 345 212
EBIT before special items 408 332 366 228 165
EBIT 377 332 358 163 134
Profit before tax 356 307 205 125 116
Profit after tax for the period 321 251 150 125 90
Balance sheet
(DKK million) 2021 2020 2019 2018 2017
Assets 3,400 2,909 2,716 2,421 1,327
Invested capital
1
1,852 1,865 1,809 1,568 907
Investments in property, plant, and equipment
2
197 134 126 138 110
Aquisition and divestment of enterprises 238 72 (20) 839 35
Net Working Capital 65 55 48 8 58
Equity 1,814 1,509 1,371 1,000 377
Net interest-bearing debt (NIBD) 350 230 407 525 460
Cash flow
(DKK million) 2021 2020 2019 2018 2017
Cash flow from operating activities 454 425 369 370 83
Cash flow from investing activities (427) (206) (105) (973) (144)
Cash flow from financing activities (25) 6 (131) 679 66
Free cash flow 27 219 264 (603) (61)
Financial ratios
2021 2020 2019 2018 2017
Organic growth 13% (6%) 6% 18% 3%
Gross margin before special items 30% 31% 31% 27% 27%
EBITDA margin before special items 20% 20% 19% 16% 15%
EBITDA margin 19% 20% 19% 14% 13%
EBIT margin before special items 14% 13% 13% 9% 10%
EBIT margin 12% 13% 13% 6% 8%
Return on Invested Capital, excluding goodwill
3
20% 18% 20% 10% 16%
Solvency ratio 50% 50% 49% 41% 28%
NIBD/EBITDA before special items ratio 0.6x 0.4x 0.8x 1.3x 1.9x
ESG performance data
2021 2020 2019 2018 2017
Average number of FTEs 1,572 1,619 1,685 1,651 1,062
FTEs end of period (excluding divestments) 1,663 1,571 1,636 1,608 1,022
Lost-Time Incident frequency (LTIF) 5 6 6 9 11
Sickness absence (days per FTE) 12 13 13 10 9
Total energy per m
3
(MJ) 553 546 565 593 551
Fresh water consumption per m
3
(litres) 351 359 382 387 394
Financial ratios and ESG have been calculated in accordance with recommendations from the Danish Society of Financial Analysts.
1
Invested capital is measured on a rolling 12-months basis
2
Investment in property, plant and equipment excludes eects from IFRS 16.
3
Due to the acquisitions the method for calculating “Return on invested capital (ROIC)” has changed to better reflect a true and fair view. ROIC for 2018-2021 has
been calculated as “Operating profit (EBIT)” held against the average invested capital (excluding goodwill), all measured on a twelve month’s basis.
Management’s review | H+H introduction
9 | H+H Annual Report 2021
five year summary
Sustainability highlights
During 2021, we made meaningful strides on our continued journey
towards carbon neutrality by committing to ambitious science-based
emissions-reduction targets.
Lower water
usage
8%
reduction in water intensity versus
base year 2019
Reduced carbon
emissions and carbon
per unit produced
6%
reduction in direct carbon emission
versus base year 2019
Energy intensity down by 2%
versus base year 2019
Steady safety
performance
0 fatalities
• Sixth consecutive year
• Lost-Time Incident frequency
of 5
• Zero incidents at 23 out of 31
factories
UN Global
Compact
Sustainable
Development
Goals ("SDGs")
Our products support SDG-
11 (Sustainable cities and
communities) and SDG-12
(Responsible consumption and
production).
H+H is committed to the
Science Based Targets
initiative ("SBTi")
1.5°C
We have a tangible plan that has
been verified and approved by
SBTi where we are reducing our
own emissions in line with the
1.5-degree scenario in the Paris
Agreement.
Net-Zero
by
2050
We are committed to achieving net-
zero emissions in our operations
and products by 2050.
Please refer to page 26 of the 2021 Sustainability Report for more information.
Management’s review | H+H introduction
10 | H+H Annual Report 2021
sustainability highlights
Global megatrends
Our business is impacted by certain structural growth drivers that transcend industries,
markets, and geographies. These megatrends are patterns of economic, social, political and/or
behavioural changes with global reach and transformative impact on people and industries. They
define the framework for our business and will often entail a demand for new products, services
and ways of working.
Sources: The European Commission, Housing Europe – The State of Housing in Europe 2021,
The United Nations World Urbanization Prospects 2018, World Health Organization
36%
The share of the European Union’s
total CO
2
emissions coming from
buildings
1 million
The unmet housing need in
Germany in 2021
48%
The share of the population in the
European Union projected to be
living in urban areas by 2050
90%
The average amount of time that
citizens in the European Union
spend indoors
Climate change
Buildings are a significant source
of energy consumption and are
responsible for large share of the
European Union’s greenhouse-gas
emissions, thereby representing
a large and cost-eective
opportunity to reduce emissions.
Undersupply of housing
Housing supply in Europe is
showing a consistent shortfall in
new construction compared to the
underlying demand, and it appears
that this unmet housing need will
only grow in the coming years.
Demographics &
urbanisation
The world’s population is growing
and so are cities. Sustainable
urbanisation will require buildings
made with non-combustible,
durable, and sustainable materials
that are energy ecient and
comfortable to be in.
Health and well-being
The global Covid-19 pandemic
has further highlighted the need
for buildings with better indoor
climate, fire resistance and
increased safety, as well as better
acoustics and sound insulation.
Management’s review | H+H introduction
11 | H+H Annual Report 2021
global mega trends
LETTER FROM THE CHAIRMAN
Taking responsibility in the fight
against climate change
Pursuing profitable growth has
long been a key strategic priority
for H+H, and I am very pleased to
present a year with double-digit
organic growth and our best-ever
annual results. I am also proud
to present the next steps on our
journey towards carbon neutrality
and our ambitious sustainability
goals.
Sustainability continues to be at the top of our
strategic agenda, and we continue our eorts towards
reaching carbon neutrality by 2050. Our customers
and partners are supporting this commitment as we
work together on the sustainable transformation of
European cities and communities.
Sustainability will be a common denominator and
a driving force in our strategic initiatives to realise
continued growth over the coming years. We wish to
be a strong and responsible player in our industry, and
we are aiming at setting new ambitious goals to play
our part in limiting the impact of climate change. In
2021, we joined the UN Global Compact and in 2022
we will join the Corporate Climate Action project, boost
innovation and drive sustainable growth by setting
ambitious, science-based emissions-reduction targets.
As the first manufacturer of AAC and CSU products, we
have committed to an ambitious 1.5-degree emissions-
reduction target. Towards 2030, it is our ambition to
reduce our scope 1 and 2 emissions by 46% and our
scope 3 emissions by 22%. We are confident that
this commitment will not only make an important
contribution in the fight against climate change, but
also add significant and sustainable long-term value to
our business and to our shareholders.
Investing to meet drivers of future growth
Since 2014, it has been a key strategic ambition for
H+H to take part in the consolidation of the European
white-stone markets with a primary focus on Germany
and Poland. Through strong strategic execution,
we have consolidated our position in our chosen
markets, and we have laid a solid foundation for
continued growth and long-term value creation for our
shareholders.
Management’s review | H+H introduction
12 | H+H Annual Report 202112 | H+H Annual Report 2021
letter from chairman
During 2021 we made meaningful strides on our
continued growth journey with the acquisition of one
aircrete factory in Feuchtwangen in Germany as well as
the acquisition of 52.5% of the shares in DOMAPOR, a
German manufacturer of aircrete and calcium silicate
blocks located in Hohen Wangelin.
The recent acquisitions provide us with a critical
mass and a unique geographical presence across the
country with the ability to eciently supply the entire
German white-stone market. This important milestone
serves as testament to our targeted M&A strategy
and ongoing investments into further upgrades aimed
at increased production eciencies. Growth through
acquisitions will remain on our strategic agenda, and we
maintain a pipeline of potential acquisition targets.
To meet the drivers of future growth, we will also invest
in the optimisation of our production platform. Through
targeted investments, we will upgrade and expand our
existing factory network with a clear aim of harvesting
eciency gains to drive further organic growth while at the
same time lowering CO
2
emissions from our production
and reducing our overall environmental footprint.
Our markets remain characterised by the longer-term
eects of a structural undersupply of housing, and
we are seeing ever-increasing expectations of more
sustainable and climate-friendly buildings throughout
the building’s lifecycle—from the use of raw materials,
production and supply chain, to the energy eciency
of both new and existing buildings as well as safe
and healthy indoor environments. H+H is strongly
positioned to take advantage of these longer-term
trends, and we will be investing in further advancing
that position over the coming years.
We also see interesting opportunities of using our
technologies in other product categories and new
product segments within the construction industry,
including the continued development of products
suited for energy-renovation as well as products
targeting eciency improvements for our customers.
Innovation will therefore be a key factor in our pursuit
of these opportunities. We will strive to remain a key
partner to our customers and work on the life-time
performance of our products, and we will explore
options for expanding their commercial range.
The power of purpose
At H+H, we believe that there are a vast number
of opportunities available to continue growing
our company and deliver long-term value to our
shareholders. To seize these opportunities, we
have defined a corporate purpose to guide us on
this journey. Our corporate purpose is that “We are
Partners in Wall Building delivering trusted, sustainable
and innovative solutions which enable better homes
and workplaces for our communities”. Our purpose is
deeply rooted in the history of our company and what
we have achieved so far but it also looks ahead to what
we can achieve together with customers, suppliers,
governments and partners across our footprint.
Enhancing shareholder value
Our company is stronger than ever and guided by
our newly articulated corporate purpose, our well-
defined promises and our unwavering commitment to
sustainability, we remain fully committed to our pursuit
of profitable growth and long-term value.
Over the recent years, we have consistently
outperformed our long-term financial targets,
and supported by the underlying market trends
of a continued structural undersupply of housing,
demographic growth, urbanisation and governmental
support in increasing housing output, we are confident
in the prospect for continued growth. We are therefore
raising our ambitions and will increase our long-term
target for EBIT margin from 11% to 12% and our target
for ROIC from 14% to 16%.
On behalf of the Board of Directors, I would like
to thank our customers and employees for your
continued support. I would also like to thank my fellow
shareholders. I look forward to continuing the journey
with you in 2022.
Kent Arentoft
Chairman
Long-term financial targets
EBIT-margin before special items
12%
14% in 2021
Financial gearing
Net interest-bearing debt to EBITDA
before special items
1-2x
0.6x in 2021
Return on Invested Capital ("ROIC")
16%
20% in 2021
Note: The long-term financial targets reflect the ambition to
maintain minimum average levels across a full business cycle.
Management’s review | H+H introduction
13 | H+H Annual Report 2021
LETTER FROM THE CEO
Meeting the strong demand while
consolidating our platform
In 2021, we delivered strong
organic growth of 13% and a
record-high EBIT before special
items of DKK 408 million. These
results were to a large extent
driven by a swift recovery of
the European housing markets
following the Covid-19 pandemic,
creating high demand and activity
levels across our footprint.
In the Central Western Europe region, organic growth
amounted to 6%, driven by both higher volumes and
sales prices. In the United Kingdom, organic growth
amounted to 34%, driven by higher sales volumes
year-on-year, primarily as a result of the nation-wide
lockdown introduced by the British Government in
March 2020. And finally, in Poland, organic growth
was 6%, driven by higher sales volumes in the CSU
business and both higher sales volumes and higher
sales prices in the AAC business.
Defending margins in a time of inflation
During the course of 2021, we have been faced with
increasing input costs and higher transport prices.
The higher transport costs have to a large extend
been a result of the strong demand seen across the
markets. To meet the high demand, and due to of a
number of planned upgrades of certain of our factories,
it has been necessary for us to adopt a more flexible
utilisation of our production capacity, which has led to
further increases in transport costs, as we have had
to ship products from alternate production facilities
and often over longer distances. Our group-wide
procurement eorts and national sourcing of inputs
and raw materials helped us avoid any major supply-
chain issues during 2021.
In combination with increasing prices for raw materials,
this has put pressure on our earnings margins. We
are confident that we can oset the negative margin
impact partially through sales-price increases. It is
anticipated that our gross margin will be higher in
the second half of 2022 as sales prices are gradually
phased in during the first half of the year.
We will continue to follow a lean manufacturing
approach to improve manufacturing eciency and
eectiveness. In combination with targeted capital
14 | H+H Annual Report 2021
Management’s review | H+H introduction
letter from ceo
investments, we see additional eciency gains to
be realised from the continuous improvement of our
production platform.
Strengthening the platform
Our eorts to consolidate the German white-stone
markets continued in 2021 with the acquisitions of the
Feuchtwangen and DOMAPOR factories.
This added capacity provides an opportunity to
perform certain upgrades and maintenance of the
production facilities at the Wittenborn factory in the
northern part of Germany. Upon completion of the
upgrades, the Wittenborn factory will be a state-of-
the-art production facility, and the factory will be well
positioned to meet future ESG-related requirements.
Innovation and sustainability will remain key focus
areas in our pursuit for continued growth. Our
Innovation team is working on solutions to further
improve the productivity and life-time performance of
our products as well as expanding their commercial
range and explore alternative applications, including
the development of products for energy renovation and
after-insulation of buildings.
We firmly believe that these strategic initiatives,
combined with a successful integration of the acquired
factories and the upgrade of the Wittenborn factory,
will provide a strong foundation as we take these next
steps on our continued growth journey.
Increased focus on strategic HR
Over the recent years, we have seen a general trend
of increasing shortages of qualified labour across the
construction industry. Our corporate purpose, well-
defined promises and the strengthening of our regional
HR functions will further support our strategic journey
and our continued ability to attract and retain the
best people in our markets and industry. In addition
to establishing dedicated HR resources in each of
our regions, we have implemented programmes for
training and development, talent management and
succession planning.
In addition, we have rolled out a set of corporate
behaviours across our organisation which in
combination with the other activities will further
support our corporate culture and position H+H as a
preferred employer in the industry.
Thank you
These past couple of years have illustrated the
strength of our company and our ability to adapt to
dierent market situations. 2020 brought a global
pandemic which continues to characterise and impact
our everyday lives, and 2021 showed a swift rebound
in market activity with demand exceeding production
capacity for most of our industry.
Throughout this period, we have demonstrated
resilience and solid operational performance, and
our employees have worked tirelessly to deliver
unparalleled customer service. We have executed on
our strategy and have continued to present strong
financial results, and we have both the operational
platform and the financial firepower available to pursue
further growth—both organically and inorganically.
Finally, I would like to thank everyone in our
organisation. The fantastic results delivered in 2021 are
testament to your continued dedication, flexibility and
commitment. I would also like to thank our customers
and partners across our markets for supporting H+H,
and we look forward to continuing our collaboration in
2022.
Michael Troensegaard Andersen
Chief Executive Ocer
"The two acquisitions
provide an important
expansion of our
German factory
network and set us
on a path to more
than triple our
German white-stone
business compared
with 2017 production
figures."
Management’s review | H+H introduction
15 | H+H Annual Report 2021
Financial outlook
Changes to the guidance during 2021
The initial outlook for 2021 was introduced on 4 March
2021 in connection with the release of the 2020 Annual
Report. The guidance reflected the severe weather
impact in Germany and Poland in the early months of
the year and was based on the expectations that the
UK market would not return to the historical high levels
of 2019. As the year progressed, the markets quickly
regained momentum and the financial guidance was
therefore upgraded in May 2021. The solid demand
continued into the second quarter with high activity
and favourable trading conditions. Coupled with the
stabilisation of the competitive situation in the Polish
2022 financial outlook
Revenue growth before acquisitions and divestments
measured in local currencies ("organic growth") is
expected to be in the range of 10% to 15%.
EBIT before special items is expected to be in the range
of DKK 420 million to DKK 500 million.
Assumptions for the financial guidance for 2022
The expectations for H+H’s financial performance in
2022 are based on a number of specific and general
assumptions. Management believes that the most
significant of these assumptions relate to the following
items:
Specific assumptions:
• Exchange rates, primarily the British pound ("GBP"),
the euro ("EUR") and the Polish zloty ("PLN"),
remain at mid-February 2022 levels.
• Inflation rates related to the cost of energy and raw-
material to stabilise at mid-February level.
General assumptions:
The expectations for H+H’s financial performance
are also based on a number of general assumptions.
Management believes that the most significant
assumptions underlying H+H’s expectations relate to:
• Sales volumes and product mix
• Price competition
• Developments in the market for building materials
• Distribution factors
• Weather conditions
• Macroeconomic and geopolitical developments
• Operational uptime at H+H’s production plants
CSU business, this led to another upgrade of the
financial guidance in August 2021. In November, the
guidance was adjusted to reflect the relatively high
visibility on sales for the remainder of the year and the
associated earnings.
On 27 January 2022, we announced preliminary,
unaudited financial results for 2021, which exceeded
the expectations set out in the financial guidance
from November 2021 due to a strong fourth quarter in
especially the Polish and Nordic markets.
Original
guidance
4 March 2021
Organic growth
0-5%
EBIT
310-370
(DKKm)
Upgrade
12 May 2021
Organic growth
2-7%
EBIT
330-390
(DKKm)
Upgrade
11 August 2021
Organic growth
8-11%
EBIT
360-400
(DKKm)
Adjustment
10 November 2021
Organic growth
~11%
EBIT
375-400
(DKKm)
Realised
result
3 March 2022
Organic growth
13%
EBIT
408
(DKKm)
Preliminary
results
27 January 2022
Organic growth
~13%
EBIT
~405
(DKKm)
Management’s review | H+H introduction
16 | H+H Annual Report 2021
financial outlook
Business model
Resources
People
We value our workforce, recognise the
advantages of diversity and believe in
the equality of people
Raw materials
Our products are made of sand, water
and lime, with cement and aluminium
added for aircrete
Factory network
We have created a strong network of
factories and sales oces with national
reach within the countries in which we
operate
Unique market conditions for growth
Structural undersupply of housing,
demographic growth, urbanisation and
changing housing needs provide a solid
growth platform
Solid capital structure
Our strong and flexible capital structure
supports our continued growth journey
and sustainable shareholder value-
creation
Added value
Customer value
By understanding our customers, their
local needs and the industry trends,
we help overcome challenges, elimi-
nate waste and manage complexities
throughout the wall-building process
Modern and carbon-friendly products
Our products oer improved indoor
climate and energy savings as well as
fire resistance and better acoustic insu-
lation between rooms. In addition, the
products are long-lasting and can be
integrated into a circular economy
Safe and attractive work environment
Employment and working conditions
must be safe, fair and non-discrimina-
tory to attract top talents and support
the development and career ambitions
of our employees
Shareholder value
We will continue to pursue profitable
growth through acquisitions and in-
vestments in the existing production
platform to generate robust, long-term
value for our shareholders. Further, we
may return excess capital to sharehold-
ers by means of dividends and/or share
buy-back programmes
We are Partners in Wall Building
delivering trusted, sustainable and
innovative solutions which enable
better homes and workplaces for
our communities
Strategy execution
We have a strong track record
of strategy execution. Through
consolidation of the European
white-stone markets, we have
realised significant synergies
related to both pricing, sourcing
and sales channels
Quality manufacturing
We follow a lean manufacturing
process to improve eciency and
eliminate waste. Further, targeted
capital investments improve
reliability, throughput and quality
across the production platform
Value-added sales
We support our customers from
the early planning stage and
throughout the wall-building
process. We aim to be the ideal
partner and a one-stop shop for
every wall-building project
Diversified market
Our product range is diverse,
and its flexibility allows for
various applications. As a
result, the customer segments
are also diverse and provide a
dierentiated risk profile
Our business
Management’s review | Our business
18 | H+H Annual Report 2021
business model
B
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&
i
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t
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t
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&
d
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y
S
a
l
e
s
&
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s
e
P
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n
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&
s
p
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PARTNERS IN WALL BUILDING
One-stop shop for wall building
Sustainable solutions
Improved workflows
and processes
Technical support
and material expertise
Availability
One point of contact
Transparency
Reliable delivery
On-site support
High-quality solutions
Improved workflows
and processes
One-stop shop for
wall building
Flexibility and quality
Improved energy savings
Improved indoor climate
Sustainable
solutions
Partners in Wall Building
Our homes, flats, oces, and
other buildings need to be
comfortable, safe and sustainable.
Our wall-building solutions have
been specifically developed
to deliver high-quality and
sustainable results.
An improved indoor climate, energy savings due to
better thermal insulation, fire resistance and increased
safety, as well as better acoustic insulation between
rooms—these are just some of the many benefits that
people who live and spent time in buildings featuring
H+H solutions will enjoy.
Our value proposition is to be a trusted partner to
builders and developers across our markets and we are
constantly striving for added value across every stage
of the wall-building process. We aim to find new ways to
improve our products and building concepts to make
building better, easier and more ecient to everyone
involved—from sourcing and production to distribution
and building sites, we are Partners in Wall Building.
Management’s review | Our business
19 | H+H Annual Report 2021
partners in wall building
Private low-rise houses
H+H has strong track record and
expertise in construction of walls for
private low-rise houses.
Applicable across segments and purposes
Volume housebuilders
H+H is a trusted partner to builders of
large construction projects ensuring
cost-ecient and high-quality solutions.
Public sector housing
H+H is committed to supporting public
sector housing providers with high quality,
long-lasting and energy-ecient housing.
Commercial and industry
H+H’s solutions are immensely
versatile and can be used in many
types of commercial and industrial
buildings—low-rise as well as high-rise.
Residential high-rise
H+H wall building solutions also include solid and
partition wall products used in residential high-rise
buildings.
Self-build
H+H wall solutions also support self-build and DIY
projects of any kind. An eco-friendly and easy to
handle material for any wall.
Renovation
H+H wall-building solutions are a popular choice for
domestic renovations, extensions, and small building
projects, including energy-ecient improvements.
Our product range is diverse,
and its flexibility allows for
various applications. As a
result, the customer segments
are also diverse and provide a
dierentiated risk profile.
Foundations
H+H Foundations Blocks are quick to install and can
be used to support solid or cavity wall constructions as
well as timber frame structures.
External walls
H+H wall elements can also be used for solid external
walls. They oer the fastest building method as well as
an unparalleled air tightness and insulation.
Internal walls
Partition walls built with H+H wall materials meet any
sound-insulation requirements and are quick and easy
to install.
A strong solution in sustainable building
Products and solutions
Management’s review | Our business
20 | H+H Annual Report 2021
products and solutions
Corporate strategy and growth platform
H+H is a leading player in the
European AAC and CSU markets.
Through our successful growth
strategy, we have significantly
increased our size and earnings
and have achieved a diversified
geographic footprint in the
European white-stone markets.
Our dierentiated market
approach and the position as a
trusted partner in wall-building
provide a solid foundation for
continued growth through
further acquisitions, continuous
optimisation of the Group’s
production network and the
potential entry into new segments
and markets.
Profitable growth through acquisitions
Since 2014, the strategy has been focused around
consolidating the European white-stone market with
a primary focus on Germany and Poland. Over this
period, we have acquired a total of 24 factories, thereby
increasing our factory network by 18 factories, net of
divestments and general restructuring of the company.
The acquisitions have also added significant incremental
capacity to our production network and have greatly
improved earnings margins through the realisation of
synergies from increased production eciency as well as
from both sourcing and sales channels.
The ambitious journey of restructuring and
consolidating the fragmented European markets began
in Poland with the acquisition of five AAC factories,
which added a significant amount of incremental
volume and allowed for improved productivity through
eective integration and development of both the
organisational structure and the production facilities.
In 2018, we entered the CSU market through two large
acquisitions with activities in Germany, Switzerland,
and Poland. The addition of the CSU business has
proven to be a successful expansion under the
“Partners in Wall Building” value proposition and has
provided a diversified market exposure as CSU is more
focused towards the high-rise segment.
Since then, we have completed several value-adding
acquisitions and in 2021, we acquired one aircrete
factory located in Feuchtwangen in Bavaria, Germany,
and announced the acquisition of 52.5% of the
shares in DOMAPOR Baustowerke GmbH & Co. KG
(“DOMAPOR”), a German manufacturer of aircrete and
calcium silicate blocks located in Mecklenburg-West
Pomerania. The acquisition closed in late-December
2021, upon which H+H obtained control of the business
in an all-cash transaction.
While the strategic focus to a larger extent will be
directed towards optimising the operational setup
and driving organic growth, we maintain a pipeline of
potential acquisition targets and may pursue any of
these should they add value to our existing operations.
We may therefore continue to engage in bolt-on
acquisitions of targets with attractive geographical
locations and/or modern and well-run production
facilities. We remain in a unique position to pursue
further expansion of our German production footprint,
as we have both the necessary financial strength and
a proven track record of integration and restructuring
from recent years’ acquisitions.
Entrance into new markets
In parallel with the heightened focus on investments in
organic growth, we may pursue further growth in the
European wall-building materials markets.
We see relevant growth opportunities through expansion
of activities into geographies with high levels of market
penetration for AAC and CSU products. The market
structures and associated risk profiles diers from
market to market—particularly for AAC as the product
Management’s review | Our business
21 | H+H Annual Report 2021
corporate strategy and growth platform
category has a global reach. We are continuously
monitoring the situation and have the financial means
to benefit from opportunities in creating market-leading
positions should targets be available.
The expansion of our product oering with other wall-
building materials may potentially also oer relevant
growth opportunities. Certain wall-building materials have
similar sales channels thereby oering potential synergies.
Also, innovation and sustainability will remain key
factors in the pursuit of further organic growth
opportunities. Development of products for energy
renovation could provide a more diversified profile
with potential sales into the market for renovation,
modernisation and improvement (“RMI”). The
European Union has proposed an alignment of the
rules for the energy performance of buildings with the
European Green Deal with the aim to decarbonise the
EU’s building stock by 2050.
This will facilitate the renovation of not only homes,
but also schools, hospitals, oces and other buildings
across Europe to reduce greenhouse-gas emissions. Our
innovation eorts are aiming at tapping into this attractive
growth avenue.
Dierentiated market approach
We firmly believe that collaboration creates lasting
value—both for the customers, suppliers and other
stakeholders. By understanding our customers, their
local needs and industry trends, we can help them
Current product portfolio
Aircrete
Central
Western
Europe
The United
Kingdom
Poland
Other
geographies
not in current
footprint
Optimise and build on current market position through continued
optimisation of production platform via investments in organic growth
combined and/or further acquisitions
Explore acquisitive growth opportunities within
new product segments through acquisitions and/or
continued focus on innovation to further complement
the value proposition. Feasible roadmap to market-
leading position must be available
Maintain market-leading position
through continued optimisation
of production platform and
investments in organic growth
Continue to harvest synergies from the recent years’ acquisitions
to further optimise and build on market position and strengthen
resilience of Polish white-stone business. This is to be combined with
investments into organic growth and/or further acquisitions.
Explore acquisitive growth opportunities in countries
adjacent to current geographical footprint to further
complement the value proposition. Feasible roadmap to
market-leading position must be available
Calcium silicate Other wall-building materials
Management’s review | Our business
22 | H+H Annual Report 2021
overcome challenges, eliminate waste and manage
complexities throughout the building process with the
aim to build long-lasting sustainable homes. We strive
to be the ideal partner and a one-stop-shop for every
wall-building project, while also assisting in optimising
the building process and the carbon emissions from a
life-time perspective.
Our value proposition is to be a trusted partner to all
customers across our markets, aiming to add value at
every stage of the building process. We are constantly
striving to find new ways to improve our products and
building concepts to make building better, easier and
more ecient to everyone involved—from sourcing and
production to distribution and building sites.
Finally, we are the first company in the white-stone
industry to have science-based targets for reduction
of carbon emissions in line with the Paris Agreement.
With tightening building regulations, our partners are
assured that we have the aspiration—and tangible
plans—for how to play an active role in the sustainable
transformation of the industry.
Continuous expansion and optimisation
of production network
The markets in which we operate hold attractive
growth opportunities due to unique macroeconomic
conditions, and we have a strong track record as a
market consolidator. Generally, and as previously
communicated, the European housing markets are
still expected to continue growing, supported by the
longer-term eects of a structural undersupply of
housing, demographic growth and urbanisation. We
remain strongly positioned to take advantage of these
longer-term trends and will be investing in further
enhancing our position over the coming years.
Following the successful consolidation of the German
and Polish white-stone markets, which has formed
a solid platform for continued growth and long-term
value creation, we will to a larger degree focus our
strategic eorts on optimising and strengthening our
production platform. This may be done via investments
in optimising the existing factory network allowing
for further eciency gains, investments in additional
capacity and a continued focus on innovation and
sustainability.
Our Continuous Improvement (“CI”) programme has
shown good results since its introduction in 2019. The
programme is a long-term commitment to deliver
sustainable margin improvements and during 2021, we
maintained our focus on improving energy eciency,
improving raw-materials consumption, reducing waste
and increasing factory up-time across our footprint.
During 2021, we have implemented a structured
Group-wide programme to drive CI, which has led to a
strengthening of the CI organisation, as well as a formal
training and education programme for all levels in the
production organisation. The improvement programme
has been aligned with and is supported by our strategic
upgrades to specific plants in Poland and Germany.
Management’s review | Our business
23 | H+H Annual Report 2021
We also see great potential in the British ‘Modern
Methods of Construction’ (“MMC”) initiative, including
marketing of our pre-cast wall-panel solutions (i.e.,
storey-height aircrete panels) to the British market
as well as a continued focus on the marketing of our
thin-joint masonry solutions, where mortar is replaced
by glue, thereby creating a thinner joint between
the individual blocks which results in faster laying
and improved productivity. Both solutions provide
improved eciency at the constructions sites, but are
also expected to result in incremental sales volumes
for H+H.
The addition of capacity through the construction of
new factories or the expansion of existing production
facilities will also be within our strategic scope. The
expansion of our AAC factory in Reda in Poland with a
new CSU production line is already well underway with
expected completion in mid-2022. Further, the German
and British Governments have recently been voicing
their ambitions to build more homes and have over the
recent years launched stimuli programmes to support
their respective targeted numbers of annual dwellings.
These ambitions are expected to drive incremental
demand, and because the Northern and Central
European white-stone industry is already characterised
by capacity constraints, the addition of capacity in
especially the UK market may provide attractive
longer-term growth opportunities for H+H. However,
we maintain our view that firm commitment and
concrete roadmaps from the British Government
and customers would be a prerequisite for significant
additions of capacity.
Defending margins and maintaining
attractive returns
In recent years, we have benefitted from strong market
conditions and through commercial excellence, we
have utilised the increase in house-building activity and
have harvested synergies from acquisitions to deliver
consistently high organic-growth rates. Further, the
combined product portfolio with AAC and CSU has
proven to be a strong combination.
In times of increased pressure from supply shortages
and focus on reliable, eective processes—such
as logistics—are key. By combining the right set of
skills, the right IT solutions and the right partners,
the logistics solution can become a dierentiator in
the marketplace. As we have grown, the production
footprint and network of logistics partners have
increased as well. We aim to deliver top-of-the-class
solutions at the right place and time, and due to our
size, we can benefit from a more ecient setup.
Following a strengthening of the procurement function
over the recent years, we have created a platform
of consolidated buying positions in Germany and
Poland has benefitted from improved procurement
processes in all regions. The company-wide Category
Management approach is expected to enable us to
leverage our increased size, and will remain a key focus
going forward.
As an increasing input-cost pressure and higher
transport costs are expected for the near term, as
well as longer-term eects from the increasing cost of
emissions allowances on cement-based products, we
will continue to follow a lean manufacturing approach
to improve manufacturing eciency and eectiveness.
The continuous improvements in the production
process will enable increased factory output and in
combination with the other initiatives, this has partly
oset cost inflation in several areas. This has been
complemented by targeted capital investments to
improve reliability, throughput and quality across
the manufacturing network. During 2021, we have
continued our eorts with increased focus on energy
savings, productivity increases and savings on
raw materials where possible. These initiatives will
continue in 2022.
Management’s review | Our business
24 | H+H Annual Report 2021
Our geographical footprint
Share of Group revenue in 2021
(DKKm)
Share of Group revenue in 2021
(DKKm)
Share of Group revenue in 2021
(DKKm)
46% 29% 25%
Central Western Europe The United Kingdom Poland
We have a diversified geographical
footprint with our activities spread
across three core regions, namely
the Central Western Europe
region (comprising Germany,
the Nordics, the Benelux
countries, the Czech Republic and
Switzerland), the United Kingdom
and Poland.
We have a leading position in most
of our markets with solid market
shares and strong customer
relationships.
Management’s review | Our business
25 | H+H Annual Report 2021
our geographical footprint
0
300
600
900
1,200
1,500
DKKm %
2017 2018 2019 2020 2021
-5
-2
1
4
7
10
+16%
%
100
75
50
25
0
2010 2021
26 | H+H Annual Report 2021
Central Western
Europe
2021 was another solid year
for the Central Western Europe
in which we continued to see
the benefits from our eorts to
consolidate the German white-
stone markets. These eorts
continued in 2021 with the
acquisitions of two additional
factories which will serve as
an important expansion of our
German factory network.
15
Factories
644
Employees
1,399
2021 revenue, DKKm
6%
2021 organic growth
1
Germany only
Revenue and Organic growth
Revenue
Organic growth
Market penetration
H+H product oering
Other wall-building materials
Sales and administration
Aircrete factories
Calcium silicate factories
~20%
AAC market share
1
~13%
CSU market share
1
Management’s review | Our business
26 | H+H Annual Report 2021
central western europe
1
OECD Economic Outlook, Volume 2021 Issue 2: Preliminary version © OECD 2021
2
Deutsche Bundesbank Monthly Report December 2021
3
Statistisches Bundesamt (Destatis) 2021
Germany
Market conditions and trends
While the Covid-19 pandemic continues to weigh on
economic activity, the German economy remains
solid and is projected to grow by around 3% in 2021,
compared to a contraction of 5% in 2020, and is
expected to return to pre-pandemic levels in 2022
1
.
Further, unemployment rates are declining and
investment levels are solid, underpinned by low interest
rates
2
, which all in all oer favourable conditions for
continued high activity in the construction industry.
The country continues to experience a significant
lack of housing space—especially in the larger cities—
driven by a growing number of smaller households as
well as current migration trends. The newly elected
German Government appears committed to address
this issue and increase the annual housing output.
The Government has recently upgraded the target
for number of dwellings to 400,000 per year—of
which 100,000 are to be publicly subsidised—which
represents an increase of approximately 50,000
dwellings from the previous target and is between
80,000 and 100,000 more dwellings than the
construction sector is currently managing to complete.
The number of building permits for new buildings issued
in 2021 increased by approximately 5% year-on-year.
However, due to the continued lack of installation
capacity and shortages of available land, the number
of issued permits has consistently outnumbered
completions of new buildings. This has caused the order
backlogs among housebuilders to grow considerably
over the recent years, and the backlog of permitted
dwellings which have not been completed totalled
almost 780,000 dwellings at the beginning of 2021
3
.
Generally, the German construction industry has for a
long period been suering from a significant shortage
of skilled labour, which creates certain bottlenecks that
point to a continued need for increasing productivity
in the construction industry through both product
innovation and partnerships models, such as our
Partners in Wall Building approach, aimed at increased
eciency at the building sites.
Over the recent years, eorts have been made to
counter the structural undersupply of housing through
incentives to homeowners and stimuli programmes
targeting the availability and development of land.
However, the eect of these programmes appears
insucient to convince builders to invest in overcoming
the labour challenges, and growth in the German
construction industry is therefore expected to remain
restraint until a viable solution is found.
Key developments in 2021
In the early months of the year, Germany was faced with
very harsh winter weather which adversely impacted
construction activity due to very low temperatures and
several days with snowfall. As the weather conditions
improved, activity quickly recovered and demand for
our products picked up significantly.
Management’s review | Our business
27 | H+H Annual Report 2021
Overall capacity utilisation for the building-materials
industry is high, but there is spare capacity available
through the activation of additional working shifts at
the factories to meet any regional peaks in demand.
There were only minor capacity expansions in the AAC
industry during 2021 with regional impacts to pricing.
Overall, pricing in both product segments continues to
follow positive trajectories.
During 2021 we performed certain planned upgrades
and maintenance at two of our German factories,
which resulted in temporary relatively lower production
output from the factories in the period. These
upgrades further resulted in temporary increased
transport costs as we had to ship products from other
production facilities over longer distances.
We closed two additional acquisitions in Germany
during the year, which will further strengthen our
German footprint and provide important capacity as we
plan to perform certain upgrades to our German factory
network in 2022. Once the two new factories have been
integrated into our German factory network, we see a
clear path towards our initial target of a market share
of at least 20% in the German AAC markets, and we are
on track to more than triple our German white-stone
business compared with 2017 production figures.
For 2022, we are planning a number of larger upgrades
at our Wittenborn factory in the northern part of
Germany. Upon completion of the upgrades, the
Wittenborn factory will be a state-of-the-art facility,
both from a production perspective as well as from an
ESG perspective. This means that while the factory will
be temporarily closed down for a period of 2022, the
upgrades are of key strategic importance, and they will
carry long-term value for H+H.
Other markets
Activity within the Danish construction industry
increased significantly during 2021 driven by high
demand and several political initiatives introduced as
a response to the Covid-19 pandemic
4
. In combination
with a general shortage of certain raw materials and
qualified labour, the phasing out of these initiatives are
expected to lead to a more normalised level for Danish
construction in 2022.
In Sweden, easing of restrictions related to the
Covid-19 pandemic have helped the economy pick up
significantly during the second half of the year. While
the country faces certain issues related to transport
and logistics as well as a general shortage of materials,
low unemployment and increases in wages bode well
for continued strong investments in housing and
construction
5
.
The Czech Republic was added to our geographical
footprint in 2019 through the acquisition of the
majority share position in Baustowerke Dresden
GmbH & Co. KG (“BWD”). Currently, we only have a
single sales oce in the country, but the market is
showing positive signs and demand for our products
has recently been strong.
The outlook for the Benelux countries remains
positive. Solid GDP-growth rates are expected for 2022
following sharp declines on the back of the Covid-19
pandemic
6
. Over the recent years, the number of
building permits issued has been steadily increasing,
underpinning the positive demand outlook.
Finally, the Swiss economy is also recovering following
the downturn caused by the Covid-19 pandemic,
albeit at slightly lower rates than previously as
supply bottlenecks and Covid-19 restrictions are
putting a strain on economic growth
7
. Growth in the
construction industry has over the recent years been
stable, but moderate. H+H maintains a market-leading
position in CSU.
4
Construction Prognosis Fall 2021, Confederation of Danish Industry, November 2021
5
The Swedish Economy September 2021, The National Institute of Economic Research (NIER)
6
CPB Netherland Bureau for Economic Policy Analysis, September 2021 and National Bank Belgium, June 2021
7
Staatssekretariat für Wirtschaft (SECO), Konjunkturprognose Winter 2021/2022
Germany's target for annual number
of dwellings
400,000
Backlog of permitted dwellings
awaiting completion
780,000
Year-on-year increase in number
of issued permits
5%
Management’s review | Our business
28 | H+H Annual Report 2021
0
200
400
600
800
1,000
DKKm %
2017 2018 2019 2020 2021
-30
-17
-4
9
22
35
%
100
75
50
25
0
2010 2021
+23%
The United
Kingdom
2021 was a very strong year for
the British construction industry
with activity levels exceeding
those of the record year of
2019. The high activity was in
part driven by the shorter-term
government stimuli programmes,
but the longer-term prospects for
the industry are strong.
3
Factories
243
Employees
884
2021 revenue, DKKm
34%
2021 organic growth
>40%
AAC market share
Revenue and Organic growth Market penetration
Revenue
Organic growth
H+H product oering
Other wall-building materials
Sales and administration
Aircrete factories
Calcium silicate factories
Management’s review | Our business
29 | H+H Annual Report 2021
the united kingdom
Market conditions and trends
Despite uncertainties resulting from the ongoing
Covid-19 pandemic, the British economy looks set to
return to pre-pandemic levels in early-2022
1
. Emerging
evidence suggests that the labour market recovery has
not been set back by the expiry of the furlough scheme
and various indicators and surveys suggest that most
of the workers still on furlough at the end of September
2021 remain in employment
2
.
Further, interest rates remain at historically low levels
3
,
boding well for the longer-term prospects of the British
housing markets, but we are closely monitoring the
situation.
It is projected that there will be 3.7 million new
households in the next 25 years
4
which highlights
the need for increasing the British housing stock
through the construction of new homes. The British
Government recently reiterated its target to increase
housing output to 300,000 new homes per year and
to deliver one million homes by 2024 to address the
challenges from the structural undersupply of housing
that the country has faced for several years
5
. In 2019,
a total of 244,000 dwellings were added, representing
the highest level in more than 30 year but still around
19% short of the Government’s target.
While the Government’s target may form a part of
the solution to the country’s housing issues, certain
barriers, including a significant shortage of skilled
labour and the lack of suitable land, may need to be
addressed if this target is to be met. The Government
has implemented initiatives to address these
challenges, including providing financial incentives
to employers and encouraging local authorities to
redevelop brownfield land, but the eects of these
initiatives appear insucient.
Further, the challenges arising from an ageing
workforce, societal changes increasingly acting against
construction in the race for talented employees, and
the added geo-political pressures of Brexit impacting
labour security, is forcing the construction industry
to modernise. The British Government is therefore
encouraging builders to implement Modern Methods
of Construction (“MMC”), which use a combination of
osite manufacturing, onsite techniques and innovative
technologies to produce homes more quickly than
traditional housebuilding methods. For H+H, this will
include the continued marketing of our pre-cast wall-
panel solutions (i.e., storey-height aircrete panels)
and of our thin-joint masonry solutions to the British
market—both of which will provide improved eciency
at the construction sites. We are already seeing solid
customer interest in these products, and we expect this
trend to continue in the coming year.
Key developments in 2021
Following the downturn in 2020 caused by the
Covid-19 pandemic, which resulted in a three-month
national lock down of the British construction industry,
housebuilders swiftly restarted operations and
ramped-up their activity. This resulted in a significant
uptick in demand for building materials, and our
operations were put under severe pressure to make up
for the production lost during the lock-down period.
Throughout 2021 the private housing market showed
continued high levels of activity, driven in part by the
general shortage of housing but also by the trend of
relocations to larger properties outside the big cities.
The demand pressure continued throughout 2021,
and our production was adjusted at our factories by
producing certain types of products at certain factories
optimising our service of customer needs. These
adjustments temporarily increased transport costs
with products shipped from sub-optimal locations.
Aircrete continues to show increasing levels of market
penetration, as the growth in the building industry has
primarily been driven by an increasing demand for
larger, detached houses—which require higher volumes
of aircrete—rather than for flats. Additional penetration
is driven by aircrete being used below the ground as
foundation blocks as well as increasing volumes of
aircrete being used in the aordable housing sector.
As has been seen over the recent years and driven by
increasing demand for our product range and the general
market growth, we have increased our sales volumes
per dwelling at the expense of alternative products, such
as dense blocks, wood-frame solutions, and stud walls.
Historically, this increased demand has been met by
capacity expansions by both H+H and our competitors,
and we see potential opportunity to further increase
our UK capacity further. This opportunity is further
underpinned by the trends seen around MMC, which
1
OECD Economic Outlook, Volume 2021 Issue 2: Preliminary version © OECD 2021
2
PwC UK Economic Outlook, December 2021
3
Bank of England
4
Oce for National Statistics, ‘Household projections for England’ (29 June 2020)
5
Ministry of Housing, Communities & Local Government (MHCLG) – Written evidence (UKH0042)
The United Kingdom's target for
annual number of dwellings
300,000
The projected number of new households
for the coming 25 years
3.7 million
Year-on-year increase in number of issued
permits for the year ended 30 September 2021
8%
are expected to drive incremental volumes for H+H.
However, we maintain our view that firm commitments
and roadmaps outlining specific initiatives for increasing
the annual housing output would be a prerequisite for
added capacity.
Management’s review | Our business
30 | H+H Annual Report 2021
0
200
400
600
800
1000
DKKm %
2017 2018 2019 2020 2021
-10
2
14
26
38
50
+16%
%
100
75
50
25
0
2010 2021
Poland
2021 showed very high activity in
the Polish construction markets
which translated into strong
demand for our AAC and CSU
products. We continue to benefit
from the market consolidation
achieved in 2018 with positive
impact on both pricing and
sourcing of materials.
13
Factories
776
Employees
737
2021 revenue, DKKm
6%
2021 organic growth
20-25%
AAC market share
20-25%
CSU market share
Sales and administration
Aircrete factories
Calcium silicate factories
Revenue and Organic growth Market penetration
Revenue
Organic growth
H+H product oering
Other wall-building materials
Management’s review | Our business
31 | H+H Annual Report 2021
poland
Market conditions and trends
Following a strong rebound from the pandemic, the
Polish economy grew by 3% in the first half of 2021
and has already surpassed pre-pandemic levels
with full-year 2021 growth estimated at more than
5%
1
. Consumption and investments are expected
to drive a trend of continued growth and the Polish
economy is expected to grow by a further 5% in 2022
2
.
Unemployment peaked in the first quarter of 2021 but
has since come down to an unemployment rate which
is in line with, or even slightly below, pre-pandemic
levels
3
. Interest rates were relatively low throughout
2021 but has since come up to a more normalised level.
However, in a historical context, interest rates remain
relatively low and thus oer favourable conditions for
further investments in the housing sector
4
.
The Polish construction market has always been highly
cyclical, and the swift recovery of the Polish economy
has coincided with a strong pick-up in construction
activity, which has caused some inflationary pressure.
However, despite construction-materials prices
escalating, the Polish construction industry presses
on and has registered a 24% year-on-year increase
in the number of dwellings started during the year,
with the number of dwellings started for individual
investors and developers increasing by 18% and 28%,
respectively
5
.
The number of building permits issued in 2021
increased by approximately 23% year-on-year, with the
number of permits issued for individual investors and
developers increasing by 21% and 24%, respectively. It
is estimated that the number of started dwellings will
decline in 2022, but to a level which is still considerably
ahead of historical averages
6
, thus providing a
continued positive outlook for the activity in the Polish
construction markets.
Since 2013, the number of building permits has
consistently outnumbered completions, thus creating a
significant construction backlog. In the long term, factors
such as shortage of skilled labour, an ageing workforce,
and a lack of new apprentices are expected to become
more apparent and will only add to this issue. In addition,
the easing of travel restrictions will likely drive migration
of skilled Polish labourers to the surrounding countries.
These trends point to a continued need for increasing
productivity in the construction industry through both
product innovation and partnerships models, such as our
Partners in Wall Building approach, aimed at increased
eciency at the building sites.
Key developments in 2021
In the early months of the year, Poland was faced with
very harsh winter weather which adversely impacted
construction activity due to very low temperatures and
several days with snowfall. As the weather conditions
improved, activity quickly recovered and demand for
our products picked up significantly.
The high demand continued throughout 2021 but
has been stabilising towards the end of the year. The
outlook does however remain strong, underpinned by
the high number of building permits issued and the
number of dwellings started, which should support
continued high activity in the coming year.
Following the opening of a new factory near Warsaw
in 2020 by a competitor, CSU prices rapidly declined
and continued this trend into the early months of 2021.
Since then, prices have recovered and are now back
at levels close to the 2019-high, with further increases
expected for 2022. While price increases are being
observed, the situation is fragile as additional capacity
may still be introduced in the Polish CSU market.
In the AAC market, pricing continues its positive
trajectory due to the strong demand and the
moderately-less competitively sensitive environment
compared to that of the CSU market.
During 2021, we restarted the expansion of our Reda
AAC factory in the northern part of Poland with the
construction of a new CSU production line and the
work is progressing well. The factory will be the first
factory in Poland capable of producing both AAC and
CSU. Further, the geographical location of the factory
is attractive, as it is situated close to the tri-city area of
Gda´nsk, Sopot and Gdynia and the competition in this
area is relatively less fierce than in Central Poland.
Production start-up from the new CSU production line
at the Reda factory is expected for Q3 2022, with an
initial capacity of 60,000 m
3
annually in phase one,
corresponding to approximately 3% of the Polish
CSU market, which later can be increased to around
100,000 m
3
annually. Given the high demand and the
positive outlook for the Polish construction markets,
we firmly believe that the market will be able to absorb
this additional capacity.
1
OECD Economic Outlook, Volume 2021 Issue 2: Preliminary version © OECD 2021
2
OECD Economic Outlook, Volume 2021 Issue 2: Preliminary version © OECD 2021
3
Statistics Poland
4
National Bank of Poland
5
Statistics Poland
6
SPECTIS
Year-on-year increase in number of
issued permits
23%
Projected economic growth
for 2021
5%
Year-on-year increase in number
of started dwellings
24%
Management’s review | Our business
32 | H+H Annual Report 2021
Financial policy and capital allocation
Financial policy
The overall objective of H+H’s financial policy is
to ensure sucient financial flexibility to meet
the Group’s strategic objectives and a robust
capital structure to maximise the return for H+H’s
shareholders.
The long-term target (i.e., through a business cycle) for
the financial gearing ratio is 1-2 times EBITDA before
special items. The ratio may exceed this level from time
to time following certain significant acquisitions.
Capital allocation priorities
Our free cash-flow allocation priorities are unchanged
from previous years:
1. Repayment of net interest-bearing debt in periods
when the financial gearing ratio is above the long-
term target range;
2. Pursue value-adding investments in the form of
bolt-on acquisitions or development of the existing
business; and
3. Distribution of capital to the shareholders by means
of share buy-backs and/or dividends.
Value-adding investments
We actively participate in the consolidation of the
fragmented European white-stone market and
have created substantial shareholder value through
acquisitions over the recent years. Since 2014, we have
acquired a total of 24 factories, adding more than DKK
450 million in annual EBITDA from around DKK 1,400
million in total M&A investments over the period.
During 2021, we made two additional acquisitions in
Germany, with the acquisition of one AAC factory in
Feuchtwangen and 52.5% of the shares in
DOMAPOR Baustowerke GmbH & Co. KG, a German
manufacturer of both AAC and CSU products located
in Hohen Wangelin.
Since the introduction of the current growth strategy in
2014, We have been able to create an increasing return
on invested capital (“ROIC”) over time. We will continue
to pursue opportunities to restructure and consolidate
in our core markets.
We will pursue further growth in the European markets.
Entering new markets may include countries adjacent to
(1) Before special items (2) Free cash flow, excluding M&A has been pro-forma adjusted for build-up of inventory related to the updgrade of the Burough Green factory,
which adversly impacted free cash flow by DKK 81 million in 2017 and positively impacted free cash flow by DKK 76 million in 2018 (3) In 2018, ROIC was negatively impacted
by a one-o related to the acquisition and integration of the German and Polish businesses and impairment of fixed assets in Russia. Adjusted for these items, ROIC in 2018
would have been 17%
the already-existing geographies, as well as the addition
of new products under the value proposition, Partners in
Wall Building.
Distribution of capital to shareholders
Supported by the continued strong earnings and free
cash-flow generation, which has resulted in a financial
gearing comfortably below the Group's long-term target
of 1-2x EBITDA, the Board of Directors has decided to
initiate a share buy-back programme of up to DKK 150
million. Please refer to Company Announcement no.
469 of 3 March 2022 for more information.
DKKm
2014 2015 2016 2017 2018 2019 2020 2021
0
100
200
300
400
500
600
+330%
Annual EBITDA
(1)
Invested Capital and Return on Invested Capital (ROIC)
3
Free cash flow, excluding M&A²
DKKm %
2014 2015 2016 2017 2018 2019 2020 2021
0
400
800
1,200
1,600
2,000
2,400
0
4
8
12
16
20
24
2014 2015 2016 2017 2018 2019 2020 2021
0
60
120
180
240
300
360
DKKm
EBITDA Invested Capital
ROIC
Free cash flow
Management’s review | Our business
33 | H+H Annual Report 2021
financial policy and capital allocation
H+H's sustainability strategy
Sustainability is a strategic
enabler of growth for H+H.
Buildings are a significant
source of energy consumption
and greenhouse-gas emissions
(“GHG”) that cause climate
change. Hence, building materials,
such as our AAC and CSU
products, are well positioned for
long-term growth as they ensure
energy-ecient buildings and help
to reduce the life-cycle emissions
of buildings.
Our Sustainability Strategy was updated in 2020
and is based on seizing the opportunity for growth in
sustainable building materials, while mitigating the
environmental, social and governance risks that are
present in its products and operations.
To support this, we have set a ten-year science-based
target to decarbonise our operations and reduce the
carbon intensity of our AAC and CSU products. We
have also committed to achieving net-zero emissions
in our products and operations by 2050. Details on
H+H GHG emissions and our science-based target are
provided on the following page and more information is
provided in our Sustainability Report for 2021.
H+H is also a signatory of the UN Global Compact and
supports the UN SDGs. The SDGs that are strategically
important to us are highlighted on this page and an
index that references SDG links is provided throughout
the Sustainability Report for 2021.
Sustainability report
35 | H+H Annual Report 2021
Management’s review | Sustainability
hh sustainability strategy
H+H’s science-based target
In 2021, H+H committed to an
ambitious 1.5°C climate target and
had our target validated by the
Science Based Targets initiative. In
doing so, we have become the first
manufacturer of AAC and CSU
and one of only six companies
within the building-products
sector in Europe to have a science-
based targets approved in line
with the 1.5-degree scenario.
Science-based targets provide companies with a
clearly defined path to reduce emissions in line with
the Paris Agreement goals. Targets are considered
‘science-based’ if they are in line with what the latest
climate science deems necessary to meet the goals
of the Paris Agreement—limiting global warming to
well-below 2°C above pre-industrial levels and pursuing
eorts to limit warming to 1.5°C.
H+H’s science-based target sets out the reductions
that we will make as a company by 2030 in our Scope
1, 2 and 3 greenhouse gas emissions and aligns H+H to
the Paris Agreement and to the EU’s climate goals.
The ten-year science-based target builds on the
product life-cycle analysis ("LCA") that we undertook
in 2020 on our AAC and CSU products—the two main
building materials manufactured and supplied by H+H.
The LCA underpins H+H’s commitment to achieving
net-zero emissions in our operations and products by
2050.
Taken together, the science-based target and the
commitment to net-zero emissions by 2050 provide
H+H with a strong foundation to reduce emissions. The
levers by which we will achieve these reductions are
discussed in the Sustainable Buildings and Climate and
Environment sections of this report.
Implementing the GHG protocol
As part of the science-based target setting process,
H+H undertook a detailed mapping of our GHG
emissions in accordance with the GHG Protocol.
This included enhancements to the methodology as
well as setting a recalculation policy and has led to
adjustments to the 2019 base year GHG emissions that
were previously reported.
H+H’s carbon footprint
H+H’s emissions amounted to approximately 913,000
tonnes of CO
2
e in 2019. In accordance with the GHG
Protocol, these are divided into three scopes:
1. Scope 1 emissions are those that we as a company
can directly influence through our own operations—
such as emissions produced in H+H’s factories.
2. Scope 2 emissions are indirect emissions from
operations, such as production of electricity and
heat elsewhere.
3. Scope 3 emissions are indirect, and are largely
driven by the manufacturers of the cement and lime
which is purchased by H+H.
Direct emissions from H+H’s operations account for
about 25% of H+H’s carbon footprint, with about 75%
of these emissions generated by the use of coal, oil,
steam, and gas in our factories.
About 75% of the emissions in H+H’s carbon footprint
are generated elsewhere along the value chain.
The majority of these emissions (approximately
95%) are generated upstream by cement and lime
manufacturers as a result of the chemical reaction that
occurs when carbon is removed from limestone as it
is heated to produce clinker for cement or lime. The
CO
2
released is an unavoidable consequence of this
reaction, as the limestone has absorbed CO
2
during its
formation.
H+H’s commitments
• H+H commits to reduce absolute Scope
1 and 2 GHG emissions by 46% by 2030
from a 2019 base year.
• H+H also commits to reduce Scope 3
GHG emissions 22% per m3 by 2030
from a 2019 base year.
Management’s review | Sustainability
36 | H+H Annual Report 2021
[Science Based Targets]
hh science based targets
PEOPLE
Organisation and people
Safety
People are at the heart of H+H
The health and safety of all our
sta, suppliers, service providers,
and customers is our primary focus
which will never be compromised
as we strive towards zero harm.
We value our workforce, recognise
the advantages of diversity and
believe in the equality of people.
Empowered by a culture built on
collaboration and trust, we provide
development opportunities which
enable our employees to reach
their potential and deliver this as
a competitive advantage to our
customers.
Management’s review
37 | H+H Annual Report 2021
people
Organisation and people
Organisation
H+H is structured into three core regions—Central
Western Europe, the United Kingdom, and Poland.
Headquartered in Copenhagen, H+H employs 1,663
people from more than ten dierent nationalities.
We believe that having a lean HQ and decentralised
management structure empower and enable our
regional management teams to act quickly and take on
the challenges in their respective areas.
Our regional set-up was initiated in 2020 and was
further strengthened with the restructuring of the
Central Western Europe region, which now oversees
production, sales and administration in Belgium, the
Czech Republic, Denmark, Germany, the Netherlands,
Sweden and Switzerland. Consequently, a key focus
for 2021 has been the implementation of the new
organisational design and the integration of our latest
acquisitions, and this focus will continue in 2022.
H+H behaviours
Launched in 2019, our HR strategy has taken the
function on a journey from being purely administrative
to creating value across the Group. This has been
achieved through various activities, including HR talent
upgrades, improvement of internal communication
with local and Group-wide intranet sites, revising short
and long-term incentives and the optimisation of HR
processes to ensure that they are fit-for-purpose.
We consider continuous development of our
employees’ competencies and personal development
as key to helping them realise their potential and
ambitions to the benefit of both themselves and
to H+H. By building on our organisational and
leadership capabilities, we want to enable individuals,
organisations and business environments to evolve
while mitigating the change risks arising from the
growing complexity in the world today.
To ensure this, 2021 saw the launch of the group-wide
initiative ‘H+H Behaviours’, which aims to create a
clear and shared understanding of which behaviours
and competencies support our strategy and fuel
performance. Various group workshops were held to
determine the behaviours which will support us now and
in the future. These were followed by regional workshops
to ensure the local relevance of the behaviours and
to discuss the need for expanding the selection in the
region to align with their local strategies. The following
Group-wide behaviours were selected:
• Strategic Mindset
• Instils Trust
• Builds Eective Teams
• Drives Results
• Customer Focus
• Action Oriented
• Collaborates
38 | H+H Annual Report 2021
Management’s review | People
organisation and people
The behaviours have already been incorporated into
certain of our people processes together with our
corporate Purpose and Promises, and they will be
further rolled out in 2022 with the implementation of a
new Learning Management System across the Group
and the launch of regional Employee Voices’ teams,
giving employees a chance to discuss and voice their
opinions on how to integrate the behaviours in their
daily work life.
Resourcing and succession planning
Resourcing and succession planning were key focus
points in 2021 and will remain so in 2022. We want to
attract, develop, motivate and retain talent, matching
business needs now and ensuring fit for the future. We
strive to become an employer of choice by providing a
safe and attractive work environment while improving
diversity and inclusion.
In 2021, we revisited and updated our Talent
Management process, identifying and mapping critical
roles and resources across the organisation to ensure
that succession plans are in place for all roles and that
all critical resources have a development plan.
The company is committed to providing equal
opportunities in employment and always hiring the
most qualified candidate for each of its recruitments—
whether internal or external. We recognize the
advantages of diversity, and we value and respect the
varied backgrounds of our employees and the dierent
experiences and skills they contribute with in terms of
gender, nationality, and educational background.
In 2021, we have made strides towards more diversity
in our regional management level while the general
gender split across the Group remains at 15%.
However, the proportion of women to men is higher at
executive and middle-management levels and lower
among production employees. At the annual general
meeting in 2022, the Board of Directors will nominate
a new candidate for the Board, which will increase
diversity in terms of gender, nationalities and skills
represented.
Absence reduction
The health and safety of our employees will always be
our most important priority and managing absence is
an essential part of managing health and wellbeing as
well as developing and retaining an excellent workforce.
Levels of absence vary from region to region and with
functional department within the company. H+H has
developed a common approach to all absences which
is used across all regions. The aim is to ensure that all
employees are supported throughout their absence,
allowing them to return to work in a safe and controlled
manner.
Targets for absence sickness have been set to deliver
an absence rate of nine days per year on average in
2024, including absenteeism from long-term illness.
Diversity in leadership positions
Non-oce workers Women Men
Total (
)
Indicator (W/M) Indicator (W/Total)
Germany - 23 23 - -
Poland 3 73 76 4% 4%
United Kingdom - 2 2 - -
Total 3 98 101 3% 3%
Oce workers Women Men
Total (
)
Indicator (W/M) Indicator (W/Total)
Benelux 1 1 2 100% 50%
Czech Republic - 1 1 - -
Germany 13 34 47 38% 28%
H+H International 1 7 8 14% 13%
Nordics 3 3 6 100% 50%
Poland 15 37 52 41% 29%
Switzerland - 1 1 - -
United Kingdom 8 28 36 29% 22%
Total 41 112 153 37% 27%
Management’s review | People
39 | H+H Annual Report 2021
Safety
We put safety first and strive
for zero harm to our people,
contractors, suppliers and
customers.
H+H takes the management of safety risks inherent in
the business very seriously and we continuously work
to improve safety and health of our employees.
This approach is guided by H+H’s Health and Safety
Policy. In moving towards our Zero Harm ambition, we
are embedding a culture of safety and applying our
safety management system across all our operations.
Near-miss reporting and root cause analysis are
mandatory activities to continuously improve H+H’s
performance together with external and internal audits.
All incidents are escalated to Group-management level
for information and guidance purposes.
All H+H factories have an 18-month Safety
Improvement Plan to drive the performance towards
Zero Harm. We apply our safety management system
across all acquisitions, and we are well-practiced in
improving the safety culture and performance across
locations that are new to the Group.
Local leaders are responsible for Health & Safety in
their locations and are supported by safety ocers
and the Group Health & Safety leadership team.
The leadership team is headed by our Group Chief
Operating Ocer. Maintaining a robust safety culture is
a continuous focus for all levels of management.
Covid-19 response
Covid-19 has continued to exert an influence on the
business in 2021. All our factories remained open in
the year, with the company maintaining best-practice
hygiene procedures and social distancing as defined
by the relevant government guidelines. A close monitor
was kept on any positive cases in the workforce,
resulting in all close contact colleagues isolating and
testing until proven negative to minimise any risk to all
other employees. This included contractors working
within our facilities. Whilst Covid-19-related isolations
did have some impact on project delivery, all facilities
were kept open and producing throughout the year.
As part of our eorts to manage the eects of the
pandemic, we have also put additional emphasis on
mental health across the Group, with various initiatives
and campaigns depending on what was found to be
most locally relevant.
H+H SHIELD campaign
Like all industries, we know our business comes
with risks and along with other companies in
our industry, we have seen terrible injuries and
even fatalities in the past. All of these have been
avoidable and we strive to never repeat these
ever again.
The H+H SHIELD campaign—which stands
for “Safety and Health in Every Level and
Department”—is supported by our unwavering
commitment to ensure the health and safety
of all our employees and stakeholders. The
campaign is an initiative to improve our safety
performance and introduces a clear and
focused vision statement which embraces
our safety vision, ambition, beliefs and
commitment.
As part of the campaign, we have introduced
a set of nine safety rules to apply across all
company employment locations, which are used
to drive a stronger safety culture across the
H+H Group based on personal accountability
and compliance with general rules and
procedures.
1. When required, work with an authorised work
permit
2. Make sure your workspace is clean, tidy and
organised
3. Check and be sure the tools you are using are
right for the job
4. Make sure moving machinery is guarded
5. Drive with care and consideration
6. Stop and Think
7. Always hold the handrail on stairs
8. Always make sure that equipment is isolated
before work begins
9. Our GOLDEN rule: Stop work if conditions are
dangerous or behaviours are unsafe.
Management’s review | People
40 | H+H Annual Report 2021
safety
Summary of strategic targets
Long-term targets Mid-term targets Short-term targets
EBIT-margin
before special items
H+H commits to reducing absolute
Scope 1 and 2 greenhouse-gas emissions by
H+H commits to reducing
Scope 3 greenhouse-gas emissions by
11% 46%
22%
14% in 2021 by 2030 compared with 2019
per kg CO
2
e/m
3
by 2030 compared with 2019
Financial gearing
Net interest-bearing debt to
EBITDA before special items
1-2x
0.6x in 2021
Return on
invested capital
14%
2050
20% in 2021
Note: The Group’s long-term financial targets reflects the ambition to maintain average minimum levels through a full business cycle
• We commit to reducing energy consumption per
m
3
by 7% versus 2019 base line of 565 MJ per m
3
by 2024
• We commit to reducing water usage by 5% versus
2019 base line of 382 litres per m
3
by 2024
• We commit to achieving zero waste to landfill by
2024
• We commit to reducing lost-time-incidents
frequency (“LTIF”) to 3 by 2024
• We commit to reducing absenteeism through
sickness to 9 days per annum by 2024
• We commit to improving gender diversity within
the Board of Directors to minimum 25-40% of the
under-represented gender by no later than the
annual general meeting in 2023
H+H commits to achieving net-zero emissions
in our operations and products by
2022 organic growth
10% to 15%
2022 EBIT before special items, DKKm
420 to 500
41 | H+H Annual Report 2021
Management’s review | Summary of strategic targets
summary of strategic targets
A WORD FROM THE CFO
Margin defence as a key driver
in a demanding market
2021 was characterised by very
high market activity following the
swift recovery of the construction
industry from the Covid-19
pandemic.
To service the high demand, global supply chains
were put under pressure, resulting in cost inflation
for transportation and certain raw materials. These
factors have increased our exposure to both financial
and operational risks, and mitigation of these risks
have been a key theme all through the year. During
2021, we have heightened the focus on margin defence,
enterprise risk management, and we have continued
the strengthening of our systems and processes.
Firm pricing policy and cost control
2021 showed increasing costs for transport and
energy, as well as for certain raw materials which were
influenced by increasing costs for emission allowances
on cement-based products. We have to a large extent
been able to mitigate these cost increases through
strong procurement eorts and solid hedging policies.
Combined with high market activity, this allowed us to
deliver the strongest financial result in the history of
H+H and outperform our long-term financial targets.
As these trends of increasing cost are likely to
continue, a key focus during the year has been to
further strengthen the procurement processes and
harvest eciency gains in the production processes
from our ongoing Continuous Improvement
programme. In addition, the two acquisitions
completed during 2021 will help mitigate the higher
transport costs arising from having to deliver products
from suboptimal production locations, as was seen in
2021.
Finally a continued firm discipline in sales pricing,
including flexible pricing agreements with links to
the increasing cost pressure from raw materials and
energy, remains key to defend earnings margins.
Risk management as a strategic driver
Since 2020 our strategic focus and initiatives within
Enterprise Risk Management (“ERM”) have matured
considerably and the ERM programme is now fully
implemented and adopted across the organisation.
During the year, we continued the maturity journey
through further initiatives such as the implementation
of control-monitoring systems and formalisation of
a clearer link from ERM to insurance coverage. In the
coming years, these important strategic eorts will
support and help us navigate through changing market
conditions.
Strengthening our systems and process platform
Our corporate IT function continues to drive our
eorts to further strengthen the business processes
and systems used across the organisation, support
innovation and growth initiatives, as well as defending
our business against IT-related threats. In 2021 we
have successfully upgraded our ERP platform in the
UK and the German AAC business to ensure further
scalability, eciencies, and standardised business
processes. The Global Process Framework established
in 2020 has been a key enabler in the roll-out of the
platform. The framework allows us to align business
processes across our operations around the upgraded
ERP platform. In 2022 we will continue the roll-out
of the upgraded ERP platform to the remaining
parts of the organisation, thereby establishing the
foundation for further use of technology to improve our
competitiveness and service to our customers.
Strong cash generation for investments
During the year H+H generated the highest operational
cash flow in company history. This allowed for further
investments into our existing and new production
sites, as well as the funding of the two acquisitions
in Germany completed in 2021. It is key for H+H to
have a strong and flexible capital structure which
can support our continued growth journey as well as
investments into further eciency and capacity gains.
Investments in improving the sustainability aspects of
our production and business will also be of the utmost
importance in the coming years. Sustainability will
be a common denominator and a driving force in our
strategic initiatives to realise continued growth over
the coming years and to meet our long-term financial
targets for earnings, financial leverage, and ROIC.
Peter Klovgaard-Jørgensen
Chief Financial Ocer
Management’s review | Performance
43 | H+H Annual Report 202143 | H+H Annual Report 2021
a word from cfo
Full year 2021 financial review
Income statement
Revenue
Total revenue increased by 14% to DKK 3,020 million in
2021 compared to DKK 2,654 million in 2020. Revenue
growth before acquisitions and divestments measured
in local currencies ("organic growth") was 13% in 2021
compared to negative 6% in 2020.
The organic growth of 13% was primarily driven by
a recovery of the UK market following the national
lockdown in 2020 as a response to the Covid-19
pandemic. Excluding the UK, organic growth was 6%
driven by strong demand and sales-price increases,
especially in the Central Western Europe region.
Revenue in Central Western Europe amounted to DKK
1,399 million compared to DKK 1,299 million in 2020.
Organic growth was 6%, mainly driven by higher sales
prices in both product categories, but partly oset by
lower sales volumes.
Revenue in the UK amounted to DKK 884 million
compared to DKK 639 million in 2020. Organic growth
was positive 34%, mainly due to higher sales volumes
and to a lesser extent due to higher sales prices.
Revenue in Poland was DKK 737 million compared to
DKK 716 million in 2020 driven by both higher volumes
and higher sales prices. Organic growth was 6%,
mainly driven by higher sales prices for AAC and higher
volumes for CSU, partly oset by lower CSU sales
prices.
Of the total revenue of DKK 3,020 million, AAC
accounted for 71%, while CSU accounted for 29%. The
corresponding figures for 2020 were a total revenue
of DKK 2,654 and a split of 68% and 32% for AAC and
CSU, respectively. The year-on-year change is mainly a
result of country mix.
Production costs
Production costs were adversely impacted by
increasing prices for certain raw materials, mainly
cement, limestone, timber, and plastic foil, as well as
higher transport prices in the UK and Germany from a
continued high demand causing shipment of products
from sub-optimal locations.
During 2021 H+H has been conducting certain planned
upgrades and maintenance at two of the factories
in Germany, resulting in relatively lower production
output from the factories in the period. The upgrades
have also resulted in increased transport costs as
H+H has had to ship products from other production
facilities and often over longer distances.
Gross profit before special items
Gross profit before special items increased by 8%
to DKK 905 million in 2021, compared to DKK 836
million in 2020, corresponding to a gross margin
before special items of 30% compared to 31% in
2020. The gross margin was adversely impacted by
higher transport costs and to a lesser extent higher
production cost.
Gross profit in the AAC business was DKK 660 million,
corresponding to a gross margin of 31%. Gross profit in
the CSU business was DKK 245 million, corresponding
to a gross margin of 28%.
EBITDA before special items
EBITDA before special items increased by 13% to DKK
591 million, compared with DKK 521 million in 2020,
corresponding to an EBITDA margin before special
items of 20%, on par with 2020.
Depreciation and amortisation
Depreciation and amortisation amounted to DKK 183
million against DKK 189 million in 2020.
EBIT before special items
EBIT before special items increased by 23% to DKK
408 million in 2021 compared to DKK 332 million in
2020, corresponding to an EBIT margin before special
items of 14% compared to 13% in 2020.
Special items
Special items for 2021 were negative DKK 31 million,
compared to DKK 0 million in 2020. Special items
primarily relate to the acquisitions completed in 2021
and comprise integration costs of DKK 11 million,
transaction and restructuring costs of DKK 13 million,
as well as a write-down of DKK 7 million related
to strategic replacement of the autoclaves in the
Wittenborn factory in Germany planned for 2022.
Recognition of special items has aected the following
financial statement lines of the income statement:
Cost of goods sold (DKK 11 million), Sales cost (DKK 4
million), Other operating income and costs (net DKK
9 million), and Depreciation and amortisation (DKK 7
million). Please refer to note 6 for more information.
EBIT
EBIT increased by 14% to DKK 377 million compared to
DKK 332 million in 2020.
Net financials
Net financials totalled an expense of DKK 21 million
in 2021 compared to an expense of DKK 25 million in
2020.
Profit before tax
Profit before tax increased by 16% to DKK 356 million
compared to DKK 307 million in 2020.
Ta x
Tax totalled an expense of DKK 35 million compared
to an expense of DKK 56 million in 2020. The relatively
lower tax is driven by deferred tax adjustments related
to acquired companies in prior years.
Profit for the period
Profit for the period totalled DKK 321 million compared
to DKK 251 million in 2020, representing an increase of
28% year-on-year.
Profit for the period attributable to H+H International
A/S’s shareholders was DKK 310 million and DKK 11
million attributable to non-controlling interest. For
2020, the profit attributable to H+H International A/S’s
Management’s review | Performance
44 | H+H Annual Report 2021
full year 2021 financial review
shareholders and to non-controlling interest was DKK
241 million and DKK 10 million, respectively.
Other comprehensive income
Other comprehensive income was positive DKK 45
million compared to negative DKK 137 million in 2020,
mainly as a result of movements in losses on value
adjustment of net pension obligations less deferred
tax of DKK 125 million and foreign exchange less
deferred tax of DKK 57 million. Please refer to the
section “Statement of changes in equity” for further
information.
Cash flow
Operating activities
Cash flow from operating activities increased by 7% to
DKK 454 million, compared to DKK 425 million in 2020,
primarily driven by higher EBITDA and positive working
capital development partly oset by tax paid.
Investing activities
Cash flow from investing activities was DKK 427
million, compared with DKK 206 million in 2020. The
year-on-year increase was mainly driven by acquisition
of entities in 2021 totalling DKK 238 million compared
to DKK 72 million in 2020.
Capital expenditures totalled DKK 197 million
compared to DKK 134 million in 2020. The relatively
higher level year-on-year was mainly a result of the
resilience plans introduced in 2020, as a response
to the Covid-19 pandemic, which included a
postponement of the expansion of the Polish AAC
factory in Reda with a new CSU production line to 2021.
Free cash flow
Free cash flow amounted to DKK 27 million, against
DKK 219 million in 2020.
Financing activities
Cash flow from financing activities was negative DKK
25 million in 2021, compared to positive DKK 6 million
in 2020. The development is primarily driven by the
purchase of treasury shares of negative DKK 95 million
partly oset by a change in borrowings of DKK 134
million.
Balance sheet
The balance sheet total on 31 December 2021 was DKK
3,400 million compared to DKK 2,909 million on 31
December 2020.
Financing
Net interest-bearing debt totalled DKK 350 million
on 31 December 2021, an increase of DKK 120 million
since 31 December 2020.
The increase in net interest-bearing debt since the
beginning of the year was primary driven by the
acquisition of enterprises, capital expenditures, and
the purchase of treasury shares, partly oset by
earnings for the period.
On 31 December 2021, financial gearing was 0.6x net
interest-bearing debt to EBITDA before special items,
which is comfortably below the Group’s long-term
financial target of 1-2x EBITDA before special items.
Net interest-bearing debt excluding leasing totalled
DKK 244 million on 31 December 2021, corresponding
to an unused committed bank facility of DKK 0.9
billion.
Equity
Equity increased by DKK 305 million in 2021.
Net gains recognised directly in equity comprise profit
for the year of DKK 321 million, a value adjustment of
pension obligations less deferred tax of DKK 36 million,
and foreign exchange adjustments of investments in
foreign entities of positive DKK 9 million.
Other changes to equity comprise recognition of
non-controlling interests arising from the acquisition
of the majority stake in DOMAPOR Baustowerke
GmbH & Co. KG of DKK 38 million, dividend paid to
non-controlling interests of DKK 10 million, recognised
costs for share programmes of DKK 6 million, and the
purchase of treasury shares of DKK 95 million. Refer to
note 3 “Sta costs”, note 19 “Share capital and treasury
shares”, note 20 “Pension obligations”, and note 25
“Business combinations” for further information.
Equity attributable to H+H International A/S’s
shareholders and to non-controlling shareholders was
DKK 1,704 million and DKK 110 million, respectively.
Return on invested capital (ROIC)
Return on invested capital was 20% compared to 18%
in 2020.
Management review for
the parent company
Profit for the year was DKK 267 million compared
to DKK 118 million in 2020. The increase of DKK 149
million against last year is driven by dividend received
in 2021 of DKK 280 million compared to DKK 124
million in 2020.
Events after the balance sheet date
No events have occurred after the balance sheet date
that will have a material eect on the parent company’s
or the H+H Group’s financial position.
Management’s review | Performance
45 | H+H Annual Report 2021
Revenue
Total revenue increased by 14% to DKK 731 million in
2021 compared to DKK 642 million in 2020. Organic
growth was 11% in 2021 compared to 4% in 2020.
The strong organic growth was mainly driven by higher
volumes and sales prices in the Central Western
Europe region and in Poland.
Gross profit before special items
Gross profit before special items was DKK 216 million
compared to DKK 196 million in 2020, corresponding
to a gross margin before special items of 30% and
31%, respectively.
The relatively lower gross margin year-on-year is
mainly due to higher production costs, and to a lesser
extent higher transport costs.
EBITDA before special items
EBITDA before special items increased by 11% to DKK
139 million compared to DKK 125 million in 2020,
representing an EBITDA margin before special items of
19%, on par with 2020.
Depreciation and amortisation
Depreciation and amortisation amounted to DKK 45
million compared to DKK 51 million in 2020.
EBIT before special items
EBIT before special items increased by 27% from DKK
74 million to DKK 94 million in 2021, corresponding to
an EBIT margin before special items of 13% compared
to 12% in 2020.
Special items
Special items amounted to DKK 27 million, against
DKK 0 million in Q4 2020.
Special items primarily relate to the acquisitions
closed in 2021 and comprise integration costs as well
as transaction and restructuring costs. Furthermore,
special items also comprise a write-down related to
strategic replacement of autoclaves in the Wittenborn
factory in Germany planned for 2022.
EBIT
EBIT amounted to DKK 67 million compared to DKK 74
million in 2020.
Net financials
Net financials totalled an expense of DKK 5 million in
2021 compared to an expense of DKK 7 million in 2020.
Profit before tax
Profit before tax was DKK 62 million compared to DKK
67 million in 2020.
Ta x
Tax totalled an income of DKK 29 million compared to
an expense of DKK 1 million in 2020, mainly driven by
an income related to adjustment of deferred tax related
to acquired companies in prior years.
Profit for the period
Profit for the period was DKK 91 million compared to
DKK 66 million in 2020.
Profit for the period is attributable to H+H International
A/S's shareholders by DKK 83 million and to non-
controlling interest by DKK 8 million. For 2020,
profit was attributable to H+H International A/S’s
shareholders by DKK 61 million and to non-controlling
interest by DKK 5 million.
Other comprehensive income
Other comprehensive income amounted to positive
DKK 22 million compared to negative DKK 21 million
in 2020, driven by actuarial gains net deferred tax
of positive DKK 14 million in relation to pension
obligations and foreign exchange adjustment related to
foreign entities of positive DKK 8 million.
Cash flow
Operating activities
Cash flow from operating activities amounted to
DKK 77 million compared to DKK 120 million in
2020, mainly driven by negative working-capital
developments and tax paid for the period.
Investing activities
Cash flow from investing activities was negative by
DKK 195 million, compared to negative DKK 67 million
in 2020, mainly as a result of cash flow related to
the acquisition of the majority stake in DOMAPOR
Baustowerke GmbH & Co. KG totalling DKK 112
million.
Capital expenditures for 2021 amounted to DKK 92
million compared to DKK 69 million in 2020.
Free cash flow
Free cash flow was negative DKK 118 million compared
to DKK 53 million in 2020 mainly as a result of the
aforementioned acquisition.
Financing activities
Cash flow from financing activities was negative DKK
56 million, compared to negative DKK 38 million in
2020, primarily driven by change in borrowings, debt
from acquisitions, and the purchase of treasury shares.
Q4 2021 key figures
Management’s review | Performance
46 | H+H Annual Report 2021
q4 2021 key figures
Q4 2021 results (unaudited)
Group Group
(DKK million) 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020
Income statement
Revenue 3,020 731 811 836 642 2,654 642 712 596 704
Gross profit before special items 905 216 250 251 188 836 196 241 177 222
EBITDA before special items 591 139 171 172 109 521 125 162 104 130
EBIT before special items 408 94 125 125 64 332 74 116 57 85
Profit after tax for the period 321 91 88 93 49 251 66 83 38 64
Balance sheet
Investments in property, plant and equipment 197 92 44 34 27 134 69 22 22 21
Cash flow
Cash flow from operating activities 454 77 176 206 (5) 425 120 158 130 17
Cash flow from investing activities (427) (195) (171) (34) (27) (206) (67) (22) (22) (95)
Cash flow from financing activities (25) (56) 1 (16) 46 6 (38) (59) (33) 136
Financial ratios
Organic growth 13% 11% 13% 39% (9%) (6%) 4% (7%) (22%) 2%
Gross margin before special items 30% 30% 31% 30% 29% 31% 31% 34% 30% 32%
EBITDA margin before special items 20% 19% 21% 21% 17% 20% 19% 23% 17% 18%
EBIT margin before special items 14% 13% 15% 15% 10% 13% 12% 16% 10% 12%
Management’s review | Performance
47 | H+H Annual Report 2021
q4 2021 results unaudited
Corporate Governance
Corporate governance is a key
aspect of H+H International
A/S in line with our well-defined
company promises. We are
continuously developing and
aligning our corporate governance
to our strategic development and
targets, as well as to our goals
and achievements, the external
environments and input from our
stakeholders.
Governance structure
Shareholders of H+H International A/S exercise their
rights at the general meeting, which is the supreme
governing body of H+H.
H+H International A/S has a two-tier management
system in which the Board of Directors and the
Executive Board are responsible for the management
of the Company’s aairs. No persons hold dual
membership of the Board of Directors and the
Executive Board. The Executive Board is responsible
for the day-to-day management of the Group, while the
Board of Directors supervises the work of the Executive
Board and is responsible for the overall management of
and strategic direction for the Group.
Competences and diversity
Considering the H+H Group’s current growth strategy,
the main competences relevant for the Board of
Directors are deemed to be strategy development as
well as executive and in-depth experience in relation
to integration processes for acquired businesses, with
a particular focus on finance, IT, HR, risk management
and ESG-driven business development, as well as
innovation, commercial and operational experience in
H+H’s core markets.
The Board of Directors and the Executive Board
recognise the importance of promoting diversity within
gender, age, nationality, international experience and
competences. Pursuant to section 139c of the Danish
Companies Act, the Board of Directors has set a target
for the gender distribution amongst its members,
whereby the Board shall seek to ensure that each
gender is represented:
• by at least one shareholder-elected member when
the Board of Directors consists of a total of four
shareholder-elected members;
• by at least two shareholder-elected members when
the Board of Directors consists of a total of five to
seven shareholder-elected members; and
• by at least three shareholder-elected members when
the Board of Directors consists of a total of eight
shareholder-elected members.
The aim is to achieve the target no later than by the
annual general meeting to be held in 2023. The target
was not achieved in 2021, as the number of female
board members remained at one out of six members
since there were no changes to the board composition
during 2021.
As allowed under section 139c(7) of the Danish
Companies Act, H+H International A/S has, due to its
relatively small size with only 22 employees at year-end
2021, opted not to have a gender diversity policy for its
dierent management levels, since the limited or no
changes among the employees in any given year make
it dicult to achieve gender diversity targets within a
meaningful time frame. However, looking at the overall
H+H Group, H+H has set some gender-specific KPIs as
further decribed in the Sustainability Report for 2021.
Instead of having a Group policy focusing merely on
gender diversity, H+H finds it more relevant to focus
on diversity in a broader sense encompassing not
only gender, but also other aspects, including but not
limited to age, education and skills, experience, and
geographical and cultural background. A Diversity
Policy for the Group was established in 2019, and
can be found on the Company’s website at
to all executives and employees of the Group and has
as its purpose to foster an inclusive and open working
climate where diversity is embraced and promoted.
Having a diverse mix of cultures, backgrounds,
genders, skills, expertise and experiences ensures a
dynamic organisation that continues to develop and
advance exactly due to its diversity, whereas having
a monoculture creates a risk of overlooking relevant
opportunities and risks due to the right questions not
being asked.
The current Board of Directors and the Executive
Board is considered to be diverse, as the members
represent very dierent competences and experiences,
five dierent nationalities and ages ranging from the
early 40’s up to the early 70’s. The Executive Board
consists of two males, who are dierent with regard
to age, educational background, competencies and
Management’s review | Governance
49 | H+H Annual Report 2021
corporate governance
international experience. For the Board of Directors,
there is awareness that gender diversity shall be
improved, and if the Board of Director’s proposal for the
coming annual general meeting on 31 March 2022 for a
new board member is approved, the diversity with regard
to nationality as well as the gender diversity on the Board
of Directors will be improved and fulfil the requirements
in Section 139c of the Danish Companies Act.
Board of Directors
The Board of Directors’ annual evaluation procedure
for 2021 was conducted with all board members
present and in parallel also through one-on-one
meetings concerning specific issues between the
Chairperson and the individual board members. The
evaluation included a review of the diversity and board
competencies required. The Board’s self-evaluation
concluded that the gender-diversity target has not
yet been met and that there exists a competence gap
in relation to sustainability and ESG, but otherwise
the collective competences of the Board of Directors
match the overall needs of H+H considering the
Group’s risks and opportunities. The Board found
that the number of board members being at six board
members is appropriate, and that the cooperation
between the board members, and with the Executive
Board and the Chairman’s leadership of the Board of
Directors, are good and eective.
At the coming annual general meeting to be held on
31 March 2022, the Board of Directors will propose
that all current board members are re-elected, with
the exception of Pierre-Yves Jullien who after 12 years
on the Board of Directors will step down. Accordingly,
for the annual general meeting on 31 March 2022,
the Board of Directors will propose the election of
Kajsa von Geijer (b. 1964), Senior Vice President HR
& Sustainability and member of Group Management
in Thule Group AB, Sweden, as a new board member.
Kajsa von Geijer has extensive international experience
within strategic and operational HR, sustainability,
ESG, and general compliance, and if she is elected, the
collective board competencies will be broadened and
the set gender-diversity target will be reached.
Board activities during 2021
During 2021 the Board of Directors held a total of six
meetings. Attendance at the board meetings and board
committee meetings is shown in the table below. Board
members unable to participate will, except in the case of
non-planned sudden hindrances, read the agenda and
background material for the meeting and then submit
comments and input prior to the meeting to ensure that
the views of all members are considered at the meeting.
Corporate governance reporting
The Corporate Governance recommendations
applicable for 2021 are the recommendations of 2
December 2020. H+H has issued a statutory annual
corporate governance statement pursuant to section
107b of the Danish Financial Statements Act, which
shows that H+H follows the recommendations
in all material respects, and explanations to the
few deviations are provided in the statement. The
statement can be found at www .hplush.com/
Data Ethics Policy
During 2021 we implemented a Data Ethics Policy. As
data becomes increasingly important in our society,
it is key to define and establish rules and guidelines
for the collection, storage and use of data. We strive
to ensure a high and adequate level of data protection,
as we recognise that privacy plays an important role
in gaining and maintaining the trust of our employees,
customers, suppliers, and other stakeholders. While
we do not process large quantities of personal data,
we acknowledge the importance of safeguarding such
data. We further acknowledge that the use of artificial
intelligence may present some ethical dilemmas which
need to be managed appropriately.
We are committed to complying with all applicable personal
data protection laws, including the Danish Financial
Statements Act §99d. We run internal audit controls to
secure compliance with both information security and data
protection requirements, and all employees developing,
purchasing or otherwise working with technology and
data-science based uses of data shall be informed about
the data-ethics principles. We do not purchase, sell
or broker data or otherwise profit from separate data
transfers from or to third parties. We do not currently
carry out data processing using artificial intelligence,
such as machine learning, as a natural part of our
business. Potential future uses relate to production and
logistics optimisation as well as marketing automation.
Whether we process personal data or other types
of data, we always apply our standards for data
ethics to the way we work, making sure that our
processing activities and security measures match the
requirements for the data we are handling. Our Data
Ethics Policy can be found on our corporate website via
the following link: www.hplush. com/ data-ethics .
Overview of committee members and attendance rate for meetings in 2021
Audit Nomination Remuneration
Board Meetings Committee Meetings Committee Meetings Committee Meetings
Kent Arentoft, Chairman - - Chair Chair
Stewart Antony Baseley Member
- - Member - -
Volker Christmann Member
- - - - Member
Pierre-Yves Jullien Member
Member Member - -
Miguel Kohlmann Member
- - - - Member
Helen MacPhee Member
Chair - - - -
Attendance rate 100% 100% 100% 100%
Management’s review | Governance
50 | H+H Annual Report 2021
Key matters transacted by the Board of Directors during 2021
(including but not limited to)
• Review of ESG policy and monitoring of process
for setting science-based emissions targets
• Group-wide talent reviews and succession
planning
• Capex planning and German factory upgrades
• Nominate Kajsa von Geijer as board member
for the election to the Board of Directors at the
Annual General Meeting in 2022
•
• Definition of the Company’s new purpose and
promises
• Strategy and business plan review, target setting,
and budget approval
• Follow up on M&A activity to ensure continued
growth
• Monitor the Company’s financial policy, debt
levels, and capital structure
• Review and assess the composition, succession
planning, competencies, and diversity of the Board
of Directors
Key matters transacted by the Board Committees
during 2021 (including but not limited to)
The Audit Committee
• Oversight of Enterprise Risk Management
principles and processes and review of key
enterprise risks and related mitigation plans
• Review of progress within IT security
• Implementation of a new Control Management
System
• Monitor the financial reporting process, including
accounting estimates and accounting policies as
well as the integrity of the reporting process
• Review of annual and interim financial reports
• Monitor the implementation of the Group-wide
ERP system
• Selection of independent auditor and
recommendation for the Board of Directors on the
election of independent auditor
• Review the Group’s tax policy
The Nomination Committee
• Review and assessment of the composition,
competencies, and diversity of the Board of
Directors
• Identification of candidates (Kajsa von Geijer) for
membership of the Board of Directors
The Remuneration Committee
• Preparation of the annual remuneration report
• Review and propose executive remuneration
• Ensuring that actual executive remuneration is
in compliance with the established remuneration
policy and the review of the individual member’s
performance
• Review and adapt the remuneration policy to the
latest corporate governance recommendations
• Propose fees for the members of the Board of
Directors
Management’s review | Governance
51 | H+H Annual Report 2021
Board of Directors
Male. Born 1962. Danish. Male. Born 1958. British. Male. Born 1957. German. Male. Born 1950. French. Male. Born 1962. German & Brazilian. Female. Born 1962. British.
Chairman of DSVM Invest A/S and subsidiar-
ies (Denmark).
Executive Chairman, Home Builders
Federation and Board of Directors
member of four subsidiaries (UK).
Managing Director, Senior Vice President
Insulation Central Europe, Member of Group
Management ROCKWOOL International
A/S. Chairman of the Board of Directors of
two companies in the ROCKWOOL Group,
managing director of five companies in the
ROCKWOOL Group and member of the Board
of Directors of ROCKWOOL Foundation.
Professional board member and advisor. Professional board member and advisor. Vice President of Finance, AstraZeneca plc
(UK).
Joined the Board of Directors in 2013. Chair-
man since 2013. Member of the Nomination
Committee (Chair) and the Remuneration
Committee (Chair).
Joined the Board of Directors in 2010.
Member of the Nomination Committee.
Joined the Board of Directors in 2017.
Member of the Remuneration Committee.
Joined the Board of Directors in 2010.
Member of the Audit Committee and
the Nomination Committee.
Joined the Board of Directors in 2018.
Member of the Remuneration Committee.
Joined the Board of Directors in 2019.
Member of the Audit Committee
(Chair).
Indirectly holds 60,000 shares in H+H via a
company he controls with no changes to his
holdings during 2021.
Holds 22,500 shares in H+H with an addition
of 3,500 shares in 2021.
Does not hold any shares in H+H and no
changes were made to his holding during
2021.
Does not hold any shares in H+H and no
changes were made to his holding during
2021.
Does not hold any shares in H+H and no
changes were made to his holding during
2021.
Does not hold any shares in H+H and no
changes were made to her holding during
2021.
Independent as defined in the Danish
Recommendations on Corporate
Governance.
Independent as defined in the Danish
Recommendations on Corporate
Governance.
Independent as defined in the Danish
Recommendations on Corporate Governance.
Independent as defined in the Danish
Recommendations on Corporate
Governance.
Independent as defined in the Danish
Recommendations on Corporate
Governance.
Independent as defined in the Danish
Recommendations on Corporate
Governance.
Broad organisation and management
experience in international companies in the
building materials and contracting sector,
particularly within strategy
development and M&A transactions.
Experience in the international housebuild-
ing industry and the developer industry,
particularly in the UK, as well as international
management experience.
Extensive experience within the building
materials production sector of Central Europe,
particularly in Germany, as well as within
financial auditing and controlling.
Experience in management of a major global
production company, including turnarounds
and eciency improvement as well as B-t-B
sales.
Extensive management experience in building
materials and industry on a global scale.
Worked in controlling, sales, production and
general management.
Extensive experience within strategic
and operational finance and international
experience in change mangement, financial
oversight and control, governance, and risk
frameworks, as well as international talent
development.
Other management positions
and directorships
Other management positions
and directorships
Other management positions
and directorships
Other management positions
and directorships
Other management positions
and directorships
Other management positions
and directorships
Member of the Board of Directors of Solix
Group AB (Sweden) and Chairman of one
subsidiary.
Chairman of Fuerst Day Lawson Holdings
Limited (UK) and Highlander-Partners (Po-
land) (two group-related companies) and Troy
Homes Limited (UK).
Member of the Board of Directors of Sferra
Fine Linens UK Limited (UK). Patron of Chil-
dren with Speciel Needs Foundation (UK).
Chairman of the Board of Directors of BuVEG
(Bundesverband energieeziente Gebäude-
hülle) (Germany).
Member of the Board of Directors of FIW
(Forschungsinstitut für Wärmtechnik)
(Germany).
Member of the Board of Directors of Saudi
Arabian Packaging Industry W.L.L. (Saudi
Arabia and United Arab Emirates).
Vice President of the Danish Chamber of
Commerce (France) and member of the
Danish Tunisian Chamber of Commerce
(Denmark).
Chairman of the Board of Directors of Ewellix
AB (Sweden), Pfleiderer GmbH (Germany),
and NMC International S.A. (Luxembourg).
Member of the Board of Directors of Archro-
ma Holdings SARL (Luxembourg) and Paul
Bauder Gmbh (Germany).
N/A
Management’s review | Governance
53 | H+H Annual Report 2021
Michael Troensegaard Andersen
Chief Executive Ocer
Peter Klovgaard-Jørgensen
Chief Financial Ocer
Executive Board
Male. Born 1961. Danish. Male. Born 1978. Danish.
Holds 55,661 shares in H+H with an addition
of 6,851 shares in 2021.
Holds 3,679 shares in H+H with an
addition of 840 shares in 2021.
Background Background
2008-2011: President of global business unit
in Trelleborg Group with 10 subsidiaries in
Europe, USA and Asia
2016-2019: CFO in ISS Denmark A/S
(Denmark)
2004-2008: Managing Director of Trelleborg
Sealing Solutions Helsingør A/S (Denmark)
2014-2016: Head of Finance in ISS
Denmark A/S (Denmark)
1997-2004: Alto International A/S (now part
of Nilfisk Group). Executive positions within
sales, marketing and general management.
2010-2014: Treasury Vice President in
ISS Group
Member of the Board of Directors of Hansen
Group A/S (Denmark) and Solar Group A/S
(Denmark)
Prior: Auditor in EY
Education Education
MSc. (Engineering and a B.Comm.
(Accounting))
MSc. (Business Economics and Auditing)
54 | H+H Annual Report 2021
Management’s review | Governance
executive board
Risk and risk management
Ensure awareness
of ERM and
policies and
procedures
Identify
Risks
Quantify and
allocate
responsibility
of risks
Identify
strategies for
managing
risks
Execute risk
strategies
Monitor
eectiveness
of risk
strategies
Review and
Report
ERM
system
1
2
3
45
6
7
Risk management
The Board of Directors evaluates our risk
management processes on a continuous basis
to ensure that the risk profile, risk processes and
risk awareness are appropriate. Responsibility
for Enterprise Risk Management (“ERM”)
eectiveness has been delegated to the Chief
Financial Ocer.
The ERM processes in H+H ensures a dynamic
process, involving the identification of risks, an
assessment of their probability and the potential
impact on business performance, reputation, and
people. The aim is to mitigate identified key risks
to an acceptable level through appropriate ERM
processes, but also to take advantage of identified
opportunities.
As in previous years, the ERM processes across
our main markets comprised the annual wheel
of activities. As part of the ERM processes,
integration into both local strategies and the
Group strategy has been established, supporting
the long-term targets of H+H.
During 2021, we have gone through an external
assessment of the ERM Framework in accordance
with the COSO ERM Framework. The ERM
Framework was confirmed to be on par with Best
Practice in the construction industry. Learnings
from the analysis have been incorporated into
activities for 2022 and 2023.
Comprises Group and Subsidiary business representatives, ensuring a balanced and complete bottom-
up process. Subsidiary management and Group functional heads conduct an annual risk review, in which
all identified key risks are described, discussed and evaluated. They are individually and collectively
responsible for ensuring that mitigating actions are implemented to reduce the identified risks to an
appropriate level as well as assessing the eectiveness of implemented mitigating actions.
Comprises Group management-team members and is responsible for communicating and ensuring risk
compliance as well as evaluating the ERM processes. The Committee develops the overall risk strategies
and scope for the ERM processes and reviews their eectiveness. The Committee also reports on
assessed risks, eectiveness and mitigating actions to the Audit Committee.
Oversees the development of the ERM system, the ongoing reporting on assessed risks and the mitigating
actions taken. Responsible for monitoring the overall status of ERM governance (i.e., its performance and
relevance).
Three Lines of Defence
ERM
Community
ERM
Committee
Audit
Committee
Communicating
and ensuring risk
compliance
1
2
3
Oversees develop-
ments of ERM
Management’s review | Governance
55 | H+H Annual Report 2021
risk and risk management
1. Market 2. Production 3. Financial
Probability
& impact
Risk Description
Risk of a change in market conditions due to a worsening global economy or
changes to EU or UK regulation, including the carbon emission regulation re-
sulting in lack of demand for and/or substitution away from H+H’s products.
The markets in which H+H operate tend to be cyclical and to some degree
correlate. Risks related to competition could occur due to excess production
capacity or changes in competitors' pricing strategies.
Risk of reduction in production capacity due to Covid-19, contamination
infection resulting from temporary closure, a shortage of raw material
supply or a major breakdown in a production facility causing a mid-to-long-
term loss of production. Such a shortfall could impact overhead recovery
and potentially sales. Also, risks related to inflationary pressure, especially
related to raw materials and transport, and our ability to absorb it through
continuous improvement projects and/or through price increases.
Risk of insucient cash or financing to conduct daily business, execute the
growth strategy and to comply with financial covenants. Also, volatility in for-
eign exchange rates could result in a risk of losses when funds are retrieved
to the Group.
Risk Mitigation
H+H have a solid understanding of the core markets and underlying
developments. A structured process for continuously updating key leading
indicators to anticipate potential impact and execute mitigating plans.
Furthermore, Group Innovation focuses on products and applications for
lower carbon emission and productivity at building sites. Finally, H+H closely
monitors economic, political and competition developments in and outside
our footprint and participate in European interest organisations for masonry
products to impact the political environment.
Due to the continued risk of Covid-19 contamination, and as an integrated
part of our safety precautions, H+H has chosen to retain the enhanced hy-
giene precautions across all sites implemented in 2020. The safety of H+H’s
employees and visitors is our first priority.
H+H regularly conducts preventive maintenance checks to limit risk of a
major breakdown. Should a major breakdown occur, other plants could
partly mitigate as a short-term option. Furthermore, H+H is insured for
breakdowns and business interruptions, so the isolated financial impact is
considered low. Finally, H+H aims towards dual sourcing of key raw materi-
als to ensure steady supply.
H+H has a committed credit facility with Nordea of DKK 1.1 billion and an
additional accordion facility of DKK 0.6 billion not currently utilized. The
agreement matures in 2024. The facilities secure funding of daily operations
and the growth strategy. Financial covenants are monitored monthly and
reported quarterly. Reports show significant headroom. The translation risk
is reduced by FX hedging on a transactional basis.
Net risk assesment
Operating in the construction sector, H+H is exposed to political and econom-
ic developments but believes to have reduced the risk to an acceptable level
through mitigating actions and has during 2021 been able to defend earnings
and cashflow in line with long term financial targets. Similarly, having a market
leading position in most of our markets, H+H is able to reduce competition
risk to an acceptable level.
Considering the mitigating plans and recent additions to factory footprint, we
believe the risk is medium but acceptable. However, H+H is continuously fo-
cusing on improving mitigating actions to production risks. As Enterprise Risk
Management has become an even more integrated part of our processes, it
has led to a better overview of mitigating actions and how to include these in
the business processes.
With the current financing agreement, H+H has low finance risk as credit
facilities provides sucient funding, long term maturities and excess cove-
nant headroom
Probability
Impact
Probability
Impact
Probability
Impact
Management’s review | Governance
56 | H+H Annual Report 2021
4. Compliance 5. People 6. IT 7. Sustainability
Probability
& impact
Risk Description
Risk of lack of compliance with laws and regulations, e.g.
competition law, GDPR, transfer pricing etc. could result
in loss of reputation and/or fines resulting in financial
impact.
Risk of incidents or fatalities at our production facilities
as they are inherently dangerous workplaces. Risk of a
scarcity of qualified labour or lack of succession to key
roles.
There is a high dependency on technology in most
aspects of the business. Securing the reliability and
integrity of systems, as well as managing threats from
cyber security, data leakage and data security are key
focus areas for H+H. An extended period of downtime
as well as data loss or leakage could result in delays,
damage to reputation and additional costs.
Increased focus on sustainability and in particular
carbon emission puts new requirements on all organisa-
tions. Demands from customers and other stakeholders
and changes in legislation could change the demand
patterns. This could lead to lack of demand for and/or
substitution away from H+H’s products if H+H is not
adapting to the new patterns.
Risk Mitigation
H+H continuously monitors new regulations within all
our markets, consults expert advisors and performs
training within key areas. Policies are deployed and both
Group and regional management of H+H communicates
the importance of compliance and regulation regularly
in written form, videos, seminars etc. Also, whistle-blow-
er policies are in place and communicated across the
organisation and digital whistle-blower platforms are
available from all H+H websites to enable easy and, if
wanted, anonymous reporting of believed non-compli-
ance. H+H has an ESG Committee consisting of Group
Ocers representing each related topic and a compli-
ance team across our footprint to facilitate, implement
and ensure awareness to compliance related matters.
The Health & Safety of our people is our first priority.
Internal H&S audits are conducted annually in rotation
and actions are prioritised implemented. H&S audits are
verified externally every three years. KPIs are monitored
routinely and form part of Management renumeration
programmes. H+H monitors developments in the local
labour markets to ensure H+H is a competitive and at-
tractive employer. Specific focus for HR includes recruit-
ing, training and developing talent as well as succession
planning. Development and training plans ensure that
our employees have the competencies necessary for us
to achieve our strategic goals.
H+H has a well-defined information security framework,
including updated policies, guidelines and tools which
supports the desired information security level. Over the
last years, H+H has taken several initiatives to improve
the IT platform and the embedded security framework.
H+H has an ESG committee at management level to
oversee the ESG risks, monitor new requirements and
implement relevant mitigating actions. Based on an
initial risk assessment the carbon footprint has been
analysed and H+H has set science-based targets in line
with the 1.5 degree scenario in the Paris Agreement.
Net risk assesment
Risk of lack of compliance with laws and regulations is
considered low including the mitigating actions taken.
The risk of incidents and fatalities does exist, but it is our
assessment that considering the mitigating actions tak-
en, the risk is reduced to an acceptable level. Enterprise
Risk Management procedures, including improved HR
processes, also contribute to a reduced people risk.
IT related risk impact is considered low, and the
likelihood of occurrence will be further reduced as
the mitigating actions are continuously updated and
implemented.
With the mitigating strategy, H+H has reduced the risk to
an acceptable level, but an execution risk for the strategy
remains. The strategy relies on use of hydrogen which
is not yet available on the market and that suppliers of
cement, lime and transport services must reduce their
direct emissions in line with their targets.
Probability
Impact
Probability
Impact
Probability
Impact
Probability
Impact
Management’s review | Governance
57 | H+H Annual Report 2021
Shareholder information
H+H international A/S is listed on the Nasdaq
Copenhagen stock exchange and is trading
under the ticker symbol HH.
Share-price development
The H+H International A/S share started the year at
a price of DKK 132.00 and closed the year at a price
of DKK 230.00, representing an increase of 74.2%.
At the end of the year, the total market value of H+H
amounted to DKK 4,136 million. For comparison,
the OMX Copenhagen Mid-Cap index increased by
28.5% in 2021 and the Danish KAXCAP index, an
index comprising all stocks trading on the Nasdaq
Copenhagen stock exchange, increased by 21.8%.
The highest traded price was DKK 280.00 on 2
November and the lowest traded price was DKK 122.80
on 28 January. The average daily turnover was 34,085
shares, representing a decrease of 26.5% relative to
2020.
Share buy-back programme
On 4 March 2021, H+H initiated a share buy-back
programme of up to DKK 100 million to be executed
over a period of twelve months. On 18 March 2021, the
share buy-back programme was increased by DKK 15
million, thereby increasing the maximum aggregate
purchase price of the shares to be bought back under
the programme to DKK 115 million. The share buy-back
programme was completed on 18 February 2022. A
total of 569,853 shares were bought back under the
programme at an aggregate purchase price of DKK 115
million. The programme was undertaken in accordance
with the ‘Safe Harbour Regulation’.
Supported by the continued strong earnings and
free cash-flow generation, which has resulted in a
financial gearing comfortably below the Group's long-
term target of 1-2x EBITDA, the Board of Directors
has decided to initiate a share buy-back programme
of up to DKK 150 million. Please refer to Company
Announcement no. 469 of 3 March 2022 for more
information.
Share capital
H+H’s share capital is currently divided into 17,983,395
shares with a nominal value of DKK 10 per share.
All the Group’s shares enjoy the same voting and
dividend rights. At the end of 2021, H+H held a total
of 548,753 shares as treasury shares. As previously
communicated, it is expected that any shares bought
back under the share buy-back programme carried
out during 2021 and early-2022, which are not
used to meet obligations relating to the Company’s
share-based incentive programme, will be proposed
cancelled at the Annual General Meeting in 2022.
Geographical distribution of shareholders
Denmark
United Kingdom
United States
Sweden
Other
Share information
Exchange Nasdaq Copenhagen
ISIN code DK0015202451
Ticker symbol HH
No. of shares 17,983,365
Denomination DKK 10 per share
Share capital DKK 179,833,650
Voting rights One vote per share
Composition of shareholders
On 31 December 2021, H+H had more than 5,300
registered shareholders. Major shareholders owning
more than 5% of the share capital and votes were
Arbejdsmarkedets Tillægspension (more than
10.0%), Nordea Funds Ltd. (more than 5.0%) and
Handelsbanken Fonder AB (more than 5.0%). When
excluding major shareholders and certain other related
shareholdings, the free float of H+H’s outstanding
shares is estimated to be around 70%.
The majority of the share capital (70%) is held by
Danish Investors. Other key markets are the United
Kingdom, the United states and Sweden, with 7%, 6%
and 6% of the share capital, respectively.
Major shareholders
Arbejdsmarkets Tillægspension, Denmark >10%
Nordea Funds Ltd., Finland >5%
Handelsbanken Fonder AB, Sweden >5%
70%
7%
6%
6%
11%
Management’s review | Governance
58 | H+H Annual Report 2021
shareholder information
January February March April May June July August September October November December
80
120
160
200
240
280
Annual general meeting
The next annual general meeting will be held on 31
March 2022. The time and place will be announced in
the notice to convene the annual general meeting as
published in a Company Announcement and on the
Group’s website. The notice will be published no earlier
than five weeks and no later than three weeks prior to
the annual general meeting. Documents for use at the
annual general meeting will be made available on the
H+H’s website, www.HplusH.com, no later than three
weeks before the meeting. Shareholder proposals for
the agenda of the annual general meeting must be
submitted no later than six weeks before the meeting
(i.e., before 16 February 2022).
Unless otherwise stated in the Danish Companies Act
or the Group’s Articles of Association, resolutions on
the amendment of the Articles of Association will be
valid only if carried by at least two thirds of the votes
cast and of the voting share capital represented at the
general meeting.
Investor Relations
The purpose of H+H’s financial communications and
other investor relations activities is to ensure that
relevant, accurate and timely information is made
available to the stock market to serve as a basis for
regular trading and a fair pricing of the H+H share.
Relevant investor information is available on H+H’s
website, www.hplush.com/investor-relations.
To ensure that capital market participants, including
current and prospective investors, are able to make
well-informed investment decisions, H+H seeks a
transparent and active dialogue with all financial
market participants, including investors, sell-side
analysts, journalists and the general public via
conference calls, participation in investor meetings and
equity conferences and social media.
H+H is currently covered by two sell-side analysts
who regularly publish equity research reports about
the company. Two other financial institutions have
coverage of the H+H share but are currently having a
2021 relative share-price performance
H+H International A/S
OMXC Mid-Cap Index (re-based)
KAXCAP Index (re-based)
changeover of analysts. A list of analysts covering H+H
can be found on the Group’s investor relations website,
https://www.hplush.com/analysts-and-share-analyses.
H+H is not normally available for dialogue about
financial matters in the three-week period leading up
to the publication of an interim financial report or the
annual report. Inquiries concerning investor relations
issues should be addressed to the Head of Investor
Relations and Treasury via email to Shareholder@
HplusH.com.
Financial calendar 2022
31 March 2022 2022 Annual General Meeting
6 May 2022 Q1 2022 Interim Financial Report
18 August 2022 H1 2022 Interim Financial Report
10 November 2022 Q1-Q3 2022 Interim Financial Report
Management’s review | Governance
59 | H+H Annual Report 2021
FINANCIAL STATEMENTS
Income statement
Statement of comprehensive income
Balance sheet
Cash flow statement
Statement of changes in equity
Notes to the consolidated financial statements
Notes – Financial statements
Notes – Income statement
Notes – Balance sheet
Notes – Supplementary information
Statement by the Executive Board and the Board of Directors
Independent auditors’ report
60 | H+H Annual Report 2021
Financial statements
financial statements intro
Income statement Statement of comprehensive income
Group Parent company
Note (DKK million) 2021 2020 2021 2020
2 Revenue 3,020 2,654 - -
3, 17 Cost of goods sold (2,115 ) (1,818 ) - -
Gross profit before special items 905 836 - -
3 Sales costs (143 ) (151 ) - -
3 Administrative costs (186 ) (168 ) (64 ) (60 )
4 Other operating income and costs, net 15 4 52 47
EBITDA before special items 591 521 (12 ) (13 )
5 Depreciation and amortisation (183 ) (189 ) (2 ) (2 )
EBIT before special items 408 332 (14 ) (15 )
6 Special items, net (31 ) - - -
EBIT 377 332 (14 ) (15 )
7 Financial income 4 2 299 145
8 Financial expenses (25 ) (27 ) (24 ) (17 )
Profit before tax 356 307 261 113
9 Tax on profit (35 ) (56 ) 6 5
Profit for the year 321 251 267 118
Profit for the year attributable to:
H+H International A/S' shareholders 310 241 267 118
Non-controlling interest 11 10 - -
Profit for the year 321 251 267 118
12 Earnings per share (EPS-Basic) (DKK) 17.5 13.5
12 Diluted earnings per share (EPS-D) (DKK) 17.5 13.5
Group Parent company
Note (DKK million) 2021 2020 2021 2020
Profit for the year 321 251 267 118
Other comprehensive income:
Items that will not be reclassified subsequently to the income statement:
20 Actuarial losses and gains 47 (110 ) - -
Tax on actuarial losses and gains (11 ) 21 - -
Items that may be reclassified subsequently to the income statement:
Foreign exchange adjustments, foreign entities 9 (48 ) - -
Other comprehensive income after tax 45 (137 ) - -
Total comprehensive income for the year 366 114 267 118
Financial statements
61 | H+H Annual Report 2021
income statement comprehensive
Balance sheet at 31 December
Assets Equity and liabilities
Group Parent company
Note (DKK million) 2021 2020 2021 2020
Goodwill 364 211 - -
Customer relations 261 244 - -
Other intangible assets 35 14 10 3
13 Intangible assets 660 469 10 3
Land and buildings 755 709 - -
Plant and machinery 633 642 - -
Other equipment, fixtures and fittings 92 87 6 7
Assets under construction 227 100 - -
14 Property, plant and equipment 1,707 1,538 6 7
15 Deferred tax assets 17 18 10 10
16 Equity investments in subsidiaries - - 1,230 1,230
16 Investments in associated companies 1 1 - -
Other receivables 5 5 - -
Receivables from subsidiaries - - 1,009 747
Other non-current assets 23 24 2,249 1,987
Total non-current assets 2,390 2,031 2,265 1,997
17 Inventories 321 282 - -
18 Trade receivables 146 80 - -
Group debtors - - 72 56
18 Other receivables 37 29 1 1
Prepayments 7 6 1 1
Cash 499 481 338 353
Current assets 1,010 878 412 411
Total assets 3,400 2,909 2,677 2,408
Group Parent company
Note (DKK million) 2021 2020 2021 2020
19 Share capital 180 180 180 180
Translation reserve (138 ) (147 ) - -
Retained earnings 1,662 1,405 1,487 1,310
Equity attributable to H+H International A/S's shareholders 1,704 1,438 1,667 1,490
Equity attributable to non-controlling interests 110 71 - -
Equity 1,814 1,509 1,667 1,490
20 Pension obligations 85 147 - -
21 Provisions 41 34 - -
15 Deferred tax liabilities 137 130 - -
Lease liabilities 85 84 1 1
22 Credit institutions 743 609 646 572
Non-current liabilities 1,091 1,004 647 573
22 Credit institutions - - - -
Trade payables 251 180 4 5
Lease liabilities 21 18 5 5
Income tax 23 30 - -
Payables to subsidiaries - - 337 320
21 Provisions 5 6 - -
Other payables 195 162 17 15
Current liabilities 495 396 363 345
Total liabilities 1,586 1,400 1,010 918
Total equity and liabilities 3,400 2,909 2,677 2,408
Financial statements
62 | H+H Annual Report 2021
balance sheet
Cash flow statement
Group Parent company
Note (DKK million) 2021 2020 2021 2020
Operating profit (EBIT) 377 332 (14 ) (15 )
7 Financial income, received 4 3 19 21
8 Financial items, paid (25 ) (23 ) (17 ) (17 )
5 Depreciation and amortisation 183 189 2 2
Write downs 7 - - -
Gain on disposal of property, plant and equipment (7 ) - - -
Loss on disposal of property, plant and equipment - 4 - -
Other adjustments with non-cash eects 7 1 6 4
Change in inventories (18 ) 20 - -
Change in receivables (54 ) 21 (16 ) 4
Change in trade payables and other payables 83 (38 ) 1 (2 )
Change in provisions and pension contribution (29 ) (28 ) - -
Income tax paid (74 ) (56 ) 5 5
Operating activities 454 425 (14 ) 2
Sale of property, plant and equipment 8 - - -
Change in borrowings to subsidiares - - (245 ) (2 )
Capital increase in subsidiaries - - - 22
7 Dividend from subsidiaries - - 280 124
25 Acquisition of enterprises and related deferred payments (238 ) (72 ) - -
13, 14 Acquisition of property, plant and equipment and intangible assets (197 ) (134 ) (16 ) -
Investing activities (427 ) (206 ) 19 144
Free cash flow 27 219 5 146
Group Parent company
Note (DKK million) 2021 2020 2021 2020
22 Change in borrowings 134 51 74 27
25 Debt from acquired enterprises (28 ) (15 ) - -
Change in lease liabilities (26 ) (21 ) - (1 )
Dividend to non-controlling interests (10 ) (5 ) - -
Purchase of treasury shares (95 ) (4 ) (95 ) (4 )
Financing activities (25 ) 6 (21 ) 22
Cash flow for the year 2 225 (16 ) 168
Cash at 1 January 481 262 353 186
25 Cash related to the acquired enterprises 7 8 - -
Foreign exchange adjustments of cash 9 (14 ) 1 (1 )
Cash at 31 December 499 481 338 353
Financial statements
63 | H+H Annual Report 2021
cash flow
Statement of changes in equity
Group
(DKK million)
Share
capital
Translation
reserve
Retained
earnings
H+H share-
holders share
Non-
controlling
interest' share Total
Equity at 1 January 2020 180 (99 ) 1,253 1,334 37 1,371
Profit for the year - - 241 241 10 251
Other comprehensive income:
Foreign exchange adjustments, foreign entities - (48 ) - (48 ) - (48 )
Actuarial gains/losses on pension plans - - (110 ) (110 ) - (110 )
Tax on other comprehensive income - - 21 21 - 21
Net gains recognised directly in equity - (48 ) (89 ) (137 ) - (137 )
Total comprehensive income - (48 ) 152 104 10 114
Acquisition of treasury shares - - (4 ) (4 ) - (4 )
Share-based payment - - 4 4 - 4
Non-controlling interests arising from acquisition - - - - 29 29
Dividend to non-controlling interests - - - - (5 ) (5 )
Total changes in equity - (48 ) 152 104 34 138
Equity at 31 December 2020 180 (147 ) 1,405 1,438 71 1,509
Profit for the year - - 310 310 11 321
Other comprehensive income:
Foreign exchange adjustments, foreign entities - 9 - 9 - 9
Actuarial gains/losses on pension plans - - 47 47 - 47
Tax on other comprehensive income - - (11 ) (11 ) - (11 )
Net gains recognised directly in equity - 9 36 45 - 45
Total comprehensive income - 9 346 355 11 366
Acquisition of treasury shares - - (95 ) (95 ) - (95 )
Share-based payment - - 6 6 - 6
Non-controlling interests arising from acquisition - - - - 38 38
Dividend to non-controlling interests - - - - (10 ) (10 )
Total changes in equity - 9 257 266 39 305
Equity at 31 December 2021 180 (138 ) 1,662 1,704 110 1,814
Parent company
(DKK million)
Share
capital
Retained
earnings
Proposed
dividend Total
Equity at 1 January 2020 180 1,192 - 1,372
Profit for the year - 118 - 118
Other comprehensive income - - - -
Total comprehensive income - 118 - 118
Acquisition of treasury shares - - - -
Share-based payment - - - -
Total changes in equity - 118 - 118
Equity at 31 December 2020 180 1,310 - 1,490
Profit for the year - 267 - 267
Other comprehensive income - - - -
Total comprehensive income - 267 - 267
Acquisition of treasury shares - (96 ) - (96 )
Share-based payment - 6 - 6
Total changes in equity - 177 - 177
Equity at 31 December 2021 180 1,487 - 1,667
Financial statements
64 | H+H Annual Report 2021
changes in equity
Notes to the consolidated financial statements
Notes - Financial statements
1 General accounting policies 66
Notes - Income statement
2 Segment information 68
3 Sta costs 69
4 Other operating income and costs before special items 71
5 Depreciation, amortisation and write down before special items 71
6 Special items, net 71
7 Financial income 72
8 Financial expenses 72
9 Tax 72
10 Income statement classified by function 74
11 Government grants 75
12 Earnings per share (EPS) 75
Notes - Balance sheet
13 Intangible assets 76
14 Property, plant and equipment 79
15 Deferred tax 81
16 Investments in subsidiaries 82
17 Inventories/cost of goods sold 83
18 Trade and other receivables 84
19 Share capital and treasury shares 85
20 Pension obligations 85
21 Provisions 89
22 Credit institutions 90
Notes - Supplementary information
23 Contingent liabilities 91
24 Auditors’ remuneration 91
25 Business combinations 92
26 Financial instruments and financial risks 93
27 Related parties 96
28 Events after the balance sheet date 96
Financial statements
65 | H+H Annual Report 2021
notes overview
Notes – Financial statements
1 General accounting policies
The annual report for the period 1 January - 31 December 2021 comprises both the consolidated financial statements of H+H International
A/S and its subsidiaries (the H+H Group) and separate financial statements for the parent company.
H+H International A/S is a public limited company registered in Denmark. The annual report of H+H International A/S for 2021 has been
prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional requirements of the
Danish Financial Statements Act.
The Board of Directors and Executive Board discussed and approved the annual report of H+H International A/S for 2021 on 3 March 2022.
The annual report for 2021 will be submitted to the shareholders of H+H International A/S for adoption at the annual general meeting on 31
March 2022.
Basis of preparation
The annual report is presented in DKK, which is the parent company’s functional currency, rounded to the nearest DKK 1 million. The annual
report has been prepared using the historical cost principle. However, derivatives are measured at fair value, and noncurrent assets and
disposal classified as held for sale are measured at the lower of their carrying amount before the reclassification and fair value less selling
costs.
Compared to last year an accounting policy for government grants has been implemented. Except for this, the accounting policies are
unchanged compared to last year. Accounting policies have been applied consistently throughout the financial year and for the comparative
figures, if not mentioned otherwise.
The accounting policies applied to the consolidated financial statements as a whole are described below, while the remaining accounting
policies are described in connection with the notes to which they relate. The aim is to give a better understanding of the individual items. The
descriptions of accounting policies in the notes form part of the overall description of accounting policies
Adoption of new, revised and amended IFRSs eective 1 January 2021
H+H International A/S has adopted all relevant new or revised and amended International Financial Reporting Standards (IFRSs) and
interpretations (IFRIC) issued by IASB and endorsed by the EU eective for the financial year 2021. It is assessed that they have not had a
material impact on the consolidated financial statement.
Other new interpretations eective 1 January 2021
It is assessed that application of other new interpretations eective on 1 January 2021 has not had a material impact on the consolidated
financial statements.
New, revised and amended IFRS Standards eective 1 January 2022
It is assessed that new, revised or amended IFRSs and Interpretations eective from 1 January 2022 will not have a material impact on the
consolidated financial statements.
New, revised and amended IFRSs and interpretations not yet adopted by EU
It is assessed that new, revised or amended IFRSs and interpretations that have been issued but not yet adopted by EU as at 31 December
2021 will not have a material impact on the consolidated financial statements.
Application of materiality
In the preparation of the annual report, H+H Group aims to focus on information which is considered to be material and relevant to the users
of the annual report. The consolidated financial statements are a result of aggregating large numbers of transactions into classes of similar
items, according to their nature or function, in the consolidated financial statements. If a line item is not individually material, it is aggregated
with other items of a similar nature in the consolidated financial statements or in the notes. The provisions in IFRS contain extensive
disclosure requirements. The specific disclosures required by IFRS are provided in the annual report unless the information is considered
immaterial to the users of the annual report.
Description of accounting policies
Consolidated financial statements
The consolidated financial statements include the parent company H+H International A/S and subsidiaries in which H+H International A/S
has control of the Subsidiary’s financial and operating policies so as to obtain returns or other benefits from the Subsidiary’s activities.
Control exists when H+H International A/S holds or has the ability to exercise, directly or indirectly, more than 50% of the voting rights or
otherwise has control of the Subsidiary in question.
The consolidated financial statements have been prepared by aggregation of the parent company’s and the individual subsidiaries’ financial
statements, applying the H+H Group’s accounting policies. Intra-group income and expenses, shareholdings, balances and dividends as well
as realised and unrealised gains arising from intragroup transactions are eliminated on consolidation.
Equity investments in subsidiaries are oset against the proportionate share of the fair value of the subsidiaries’ identifiable net assets and
recognised contingent liabilities at the date of acquisition. Accounting items of subsidiaries are fully recognised in the consolidated financial
statements.
Foreign currency translation
For each entity included in the consolidated financial statements, a functional currency has been determined. The functional currency of an
entity is the currency of the primary economic environment in which the entity operates. Transactions in currencies other than the functional
currency are accounted for as transactions in foreign currencies.
On initial recognition, transactions denominated in foreign currencies are translated into the functional currency at the exchange rates at the
transaction date. Foreign exchange dierences arising between the exchange rates at the transaction date and at the date of payment are
recognised in the income statement as financial income or financial expenses.
Receivables, payables and other monetary items denominated in foreign currencies are translated into the functional currency at the
exchange rates at the balance sheet date. The dierence between the exchange rate at the balance sheet date and the exchange rate at the
date on which the receivable or payable arose or the exchange rate used in the last annual report is recognised in the income statement as
financial income or financial expenses.
On recognition in the consolidated financial statements of foreign entities with a functional currency other than DKK, income statements are
translated at the exchange rates at the transaction date and balance sheet items are translated at the exchange rates at the balance sheet
date. An average exchange rate for each month is used as the exchange rate at the transaction date to the extent that this does not give a
significantly dierent view. Foreign exchange dierences arising on translation of the opening equity of foreign entities at the exchange rates
at the balance sheet date, and on translation of income statements from the exchange rates at the transaction date to the exchange rates at
the balance sheet date, are recognised as other comprehensive income.
Foreign exchange adjustments of balances considered part of the overall net investment in entities with a functional currency other than DKK
are recognised in the consolidated financial statements as other comprehensive income. Correspondingly, foreign exchange gains and losses
Financial statements
66 | H+H Annual Report 2021
note 1
Notes – Financial statements
1 General accounting policies – continued
on that part of loans and derivative financial instruments entered into to hedge the net investment in such entities which eectively hedges
against corresponding exchange gains/losses on the net investment in the entity are recognised as other comprehensive income.
On the complete or partial disposal of a foreign operation, or on the repayment of balances that are considered part of the net investment,
the share of the cumulative exchange adjustments that is recognised in equity and attributable to this is recognised in the income statement
when the gain or loss on disposal is recognised.
On the disposal of partially owned foreign subsidiaries, the part of the translation reserve attributable to non-controlling interests is not
transferred to the income statement. On the partial disposal of foreign subsidiaries without loss of control, a proportionate share of the
translation reserve is transferred from the parent company shareholders’ share of equity to non-controlling interests’ share of equity.
The repayment of balances that are considered part of the net investment is not itself considered to constitute partial disposal of the
subsidiary.
Cash flow statement
The cash flow statement shows the cash flows for the year, broken down by operating, investing and financing activities, and the year’s
change in cash and cash equivalents as well as the cash and cash equivalents at the beginning and end of the year.
The cash flow eect of acquisitions and disposals of entities is shown separately under cash flows from investing activities. Cash flows from
acquisitions of entities are recognised in the cash flow statement from the date of payment, and cash flows from disposals of entities are
recognised up to the date of disposal.
Cash flows in currencies other than the functional currency are translated at average exchange rates, unless these deviate significantly
from the rates at the transaction date. Cash flows from operating activities are determined as operating profit adjusted for depreciations,
amortization and impairment losses, non-cash operating items, change in working capital, pension contributions, interest received and paid,
and income tax paid.
Cash flows from investing activities comprise payments in connection with acquisitions and disposals of entities and activities; acquisitions
and disposals of intangible assets, property, plant and equipment, and other non-current assets; and acquisitions and disposals of securities
that are not recognised as cash and cash equivalents. Leases are accounted for as non-cash transactions.
Cash flows from financing activities comprise changes in the size or composition of the share capital and associated expenses as well as
the raising of loans, repayment of interest-bearing debt, purchase and sale of treasury shares, and payment of dividends as well as dividend
received from subsidiaries.
Cash and cash equivalents comprise cash and securities with a maturity of less than three months at the time of acquisition that are readily
convertible to cash and are subject to an insignificant risk of changes in value.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown
within borrowings in liabilities in the balance sheet.
Financial ratios
Other financial ratios have been prepared in accordance with the Danish Finance Society‘s guidelines.
The financial ratios under Key figures in the Managemen't review have been calculated as follows:
Gross margin Gross profit x 100
Revenue
EBITDA margin EBITDA x 100
Revenue
EBIT margin EBIT x 100
Revenue
Return on invested capital * EBIT
Average invested capital
Earnings per share (EPS) ** Profit/loss for the year
Average number of shares outstanding
Diluted earnings per share (EPS-D) ** Diluted earnings
Diluted average number of shares outstanding
Return on equity Profit/loss for the year x 100
Average equity excl. non-controlling interests
Solvency ratio Equity at year-end (attributable to H+H) x 100
Total equity and liabilities, year-end
Book value per share, year-end Equity (in H+H),year-end
Number of shares, year-end
Price/book value Share price
Book value per share, year-end
Price-earnings ratio (PE) Share price
Earnings per share
Lost-time incident frequency (LTIF) Number of lost time incidents x 1 million
Hours worked
Payout ratio Total dividend paid x 100
Profit/loss for the year
Free cash flow The sum of cash flow from operating and investing activities
NIBD/EBITDA Net interest-bearing debt,year-end
EBITDA
* Return on invested capital is measured on a twelve months basis. Invested capital is calculated as net working capital plus tangible assets and intangible assets
excluding goodwill deducted by provisions and operating non-current liabilities. Net working capital is defined as inventories, trade receivables, other receivables,
prepayments deducted by trade payables and other payables.
** Earnings per share (EPS) and diluted earnings per share (EPS-D) are determined in accordance with IAS 33.
Financial statements
67 | H+H Annual Report 2021
Notes – Financial statements
1 General accounting policies – continued
Glossary
EBITDA Operating profit before depreciation, amortisation and financial items
EBIT Operating profit before financial items
Special items Refer to note 6 for accounting policy for special items
Margins before special items Consists of defined margins adjusted for special items re above and note 6
Organic growth Revenue growth excluding eects from changes in foreign exchange rates and revenue from
acquisitions and divestments
Significant accounting estimates and judgements
Determining the carrying amounts of some assets and liabilities requires Management to make judgements, estimates and assumptions
concerning future events. The estimates and assumptions made are based on historical experience and other factors that are believed
by Management to be sound under the circumstances but that, by their nature, are uncertain and unpredictable. The estimates and
assumptions may be incomplete or inaccurate, and unforeseen events or circumstances may occur. Moreover, the H+H Group is subject to
risks and uncertainties that may lead to the actual outcomes diering from these estimates and assumptions. It may be necessary to change
estimates and assumptions made previously as a result of changes in the factors on which these were based or as a result of new knowledge
or subsequent events
Critical accounting estimates and judgements made in connection with the financial reporting are set out in the following notes:
• Impairment testing of intangible assets, note 13
• Lease and service contracts, note 14
• Recovery of deferred tax assets, note 15
• Investments in subsidiaries, note 16
• Defined benefit pension plans, note 20
• Business combinations, note 25
Given the evolving nature of the Covid-19 pandemic and the uncertainties involved, we will continue to monitor the situation and implication
on Group’s financial position, activities and cash flows. Depending on a potential escalation of Covid-19 in the future and thereby the
long-term impact for H+H, there is an inherent risk that the estimates and judgements made in the consolidated financial statements for
2021 could change. Future changes in estimates and judgement may have an impact on the Group’s result and financial position. As of 31
December 2021, we have included updated estimates to assess the recoverability of our asset base, including expected credit losses. We have
made no specific impairments of assets and no additional obligations or liabilities have been recognised as a direct result of Covid-19.
2 Segment information
Key customers
One customer in the United Kingdom represented approx. 20% of the H+H Group’s total revenue in 2021 (2020: approx. 19%). The following
geographical areas in the Group represent more than 10% of revenue or non-current assets
Group
(DKK million) 2021 2020
Revenue
Non-
current
assets Revenue
Non-
current
assets
Central Western Europe 1,399 1,704 1,299 1,381
UK 884 239 639 216
Poland 737 420 716 414
Other countries and eliminations - 27 - 20
3,020 2,390 2,654 2,031
When presenting information on geographical areas, information on revenue is based countries except for “Central Western Europe” which
comprise of Germany, Switzerland, Denmark, Sweden, Czech Republic, Holland and Belgium. Revenue in 2021 for Germany amounts to DKK
946 million (2020: DKK 885 million). All revenue relates to sales of goods and transport services.
Revenue in Denmark was DKK 222 million in 2021 (2020: DKK 197 million). Non-current assets in Denmark at year-end 2021 amounted to
DKK 29 million (2020: DKK 21 million).
Accounting policies
The reporting of operating segments is in accordance with the internal reporting to the Executive Management which constitute H+H’s chief operating
decision maker. Segment information is prepared in accordance with H+H’s accounting policies and the internal financial reporting framework.
H+H has identified several operating segments which has been aggregated into one reporting segment. The operating segments all share similar
economic characteristics, are similar in the nature of products, production processes and customer base as well as in distribution methods.
Executive Management is responsible for decisions about overall resource allocation and performance assessment. Business decision on
resource allocation and performance evaluation for each of the operating segments are made on basis of EBIT before special items. Decision
on financing and tax are made for H+H as a whole.
Segment income and expenses as well as segment assets are those items that are directly attributable to the individual segment or can
be allocated to the segment on a reliable basis. Unallocated items comprise primarily of items relating to H+H’s administrative functions,
investing activities etc.
Segment income and expenses as well as segment assets are those items that are directly attributable to the individual segment or can be allocated
to the segment on a reliable basis. Unallocated items comprise primarily of items relating to H+H’s administrative functions, investing activities etc.
Financial statements
68 | H+H Annual Report 2021
note 2
Notes – Income statement
3 Sta costs
Group Parent company
(DKK million) 2021 2020 2021 2020
Wages and salaries 503 458 37 30
Defined contribution plans, see note 20 7 8 - -
Share-based payment 6 4 6 4
Remuneration to the Board of Directors 3 3 3 3
Other sta costs 51 50 - -
570 523 46 37
Sta costs are recognised as follows:
Production costs 342 311 - -
Sales and distribution costs 111 110 - -
Administrative costs 117 102 46 37
570 523 46 37
Average full-time equivalent sta 1,572 1,619 21 16
Remuneration to the Executive Board:
Michael Troensegaard Andersen (CEO):
Salary and other benefits 4.2 4.1 4.2 4.1
Bonus 1.5 1.3 1.5 1.3
Share-based payment 1.7 1.5 1.7 1.5
Pension - - - -
7.4 6.9 7. 4 6.9
Peter Klovgaard-Jørgensen (CFO):
Salary and other benefits 2.7 2.5 2.7 2.5
Bonus 0.9 0.8 0.9 0.8
Share-based payment 0.8 0.4 0.8 0.4
Pension - - - -
4.4 3.7 4.4 3.7
Total 11.8 10.6 11.8 10.6
Group Parent company
(DKK million) 2021 2020 2021 2020
Remuneration to non-registered members of executive management:
Salary and other benefits 4.7 4.4 4.7 4.4
Bonus 1.7 1.3 1.7 1.3
Share-based payment 1.1 0.9 1.1 0.9
Pension 0.3 0.3 0.3 0.3
Total 7.8 6.9 7. 8 6.9
Remuneration Policy for Board of Directors and Executive Board
The Remuneration Policy for H+H International A/S (H+H) was adopted at the annual general meeting on 2 April 2020. The overall objective
of the Remuneration Policy is to provide a remuneration framework that supports successful execution of the H+H Group strategy.
The Board of Directors has established a Remuneration Committee that assists the Board of Directors in developing, implementing and
continuously complying with the Remuneration Policy. The Charter of the Remuneration Committee as well as a description of the key
matters handled by the Remuneration Committee for the latest financial year is available at www.HplusH.com/board-committees.
The Board of Directors does not receive any form of incentive payment, and remuneration to the Executive Board consists of fixed salary and
other benefits as well as the variable elements short-term incentive programs (STIP) and long-term incentive programs (LTIP).
Board of Directors
The Board of Directors comprises of six members. The annual general meeting on 26 March 2021 approved remuneration for 2021 to the
Chairman of the Board of DKK 825,000 (2020: DKK 825,000) and remuneration to ordinary board members of DKK 275,000 (2020: DKK
275,000). In addition each member of the Board of Directors also received remuneration for board committee work, DKK 75,000 (2020: DKK
75,000) and the chair of the Audit Committee DKK 150,000 (2020: DKK 150,000). The board committees currently comprise of an Audit
Committee, a Nomination Committee and a Remuneration Committee.
Executive Board
Short-term incentive programs (STIP)
In addition to the fixed salary, remuneration for the Executive Board consists of an annual cash bonus based on performance related to the
extent of achievement of pre-defined key performance indicators (KPIs). The bonus is therefore not guaranteed. In the case of termination of
employment, the member is entitled to a pro rata bonus up to the date of termination, if the performance achieved by year-end means that a
cash bonus has been earned.
Long-term incentive programs (LTIP) for 2021
In March 2021, a new long-term incentive program (LTIP), being a performance share unit (PSU) program, was implemented by the Board of
Directors. At initiation, a total of 65,900 PSUs was granted to the participants, including 15,700 PSUs to H+H’s CEO and 9,800 PSUs to CFO.
The number of PSUs that vest at the end of a vesting period depends on the extent of achievement of the specific KPIs. The vesting period
Financial statements
69 | H+H Annual Report 2021
note 3
Notes – Income statement
for the PSUs is approximately three years, with vesting for the 2021 LTIP being in 2024 when the audited annual report for 2023 is publicly
announced. Upon vesting, the participants will receive one H+H share per PSU that vests.
Long-term incentive programs (LTIP) related to prior years
In March 2020, a PSU program, similar to above, was launched, and in 2019 and 2018, matching share programs were launched for the
Executive Board and certain key employees in the H+H Group. In the matching share programs, each participant invested H+H shares into the
program, which will trigger vesting of a maximum allocation of 3 shares per investment share by the end of the vesting period, if all the vesting
criteria are fulfilled. Vesting criteria also relate to continuous employment in the H+H Group during the vesting period or dismissal as a “good
leaver”. Vesting period for the matching share programs is approximately 3 years.
In March 2021 a total of 31,068 shares vested relating to the 2018 matching share program, hereof 3,322 shares settled in cash.
Pending share programs
The fair value of the programs are determined as the number of shares/PSU’s which are expected to vest. The share price used in calculating
the value of the programs is the average share price on the first 10 days of the trading window when the programme is launched. At vesting,
grants can be settled with shares or by cash, based on the company’s decision. Cost for share programs are recognised as sta costs until
the expiry of the vesting periods. Cost are reversed for participants that voluntarily (i.e. “bad leavers”) leave the H+H Group.
As of 31 December 2021, the Company had the following pending share programs with associated fair values:
Max. Shares/
PSUs to be
granted
Expected
shares/PSUs to
be granted
Max. value
(DKK million)
Exp. value
(DKK million)
2019-programme, vesting in March 2022 54,957 54,957 5.6 5.6
2020-programme, vesting in March 2023 87,400 81,457 7.0 6.5
2021-programme, vesting in March 2024 65,900 53,025 10.0 8.0
The programmes pending are hedged in whole or in part by purchase of treasury shares. In 2021, the Company bought 474,153 treasury
shares (2020: 30,000 shares), mostly related to the share buy-back program. Refer to note 19 for more information.
3 Sta costs – continued
Management’s holding of shares in H+H International A/S
1 January
2021
Additions or
sold/settled
during
the year
31 December
2021
Market
value*
Board of Directors:
Kent Arentoft (indirect ownership) 60,000 - 60,000 13,800
Stewart Antony Baseley 19,000 3,500 22,500 5,175
Volker Christmann - - - -
Pierre-Yves Jullien - - - -
Miguel Kohlmann - - - -
Helen MacPhee - - - -
79,000 3,500 82,500 18,975
Executive Board:
Michael Troensegaard Andersen 48,810 6,851 55,661 12,802
Peter Klovgaard-Jørgensen 2,839 840 3,679 846
Total 130,649 11,191 141,840 32,623
* Calculation of the market value is in DKK thousand and is based on the quoted share price of DKK 230.00 at 30 December 2021.
Accounting policies
The H+H Group’s incentive schemes comprise share programmes for senior executives and certain key employees.
The value of services rendered by employees in return for share grants is measured at the fair value of the shares. For equity settled shares,
the grant date fair value is measured and recognised in the income statement as sta costs over the vesting period of the shares. The costs
are set o directly against equity.
On initial recognition of shares, the number of shares expected to vest is estimated, cf. the service condition described. The figure initially
recognised is subsequently adjusted for changes in the estimate of the number of shares expected to vest, so that the total recognition is
based on the actual number of vested shares.
Financial statements
70 | H+H Annual Report 2021
Notes – Income statement
4 Other operating income and costs before special items
Group Parent company
(DKK million) 2021 2020 2021 2020
Other operating income:
Management fee - - 52 47
Gain on disposal of property, plant and equipment 7 - - -
Rental income 6 10 - -
Other income 5 2 - -
18 12 52 47
Other operating costs:
Loss on disposal of property, plant and equipment - (4) - -
Other costs (3) (4) - -
(3) (8) - -
Total 15 4 52 47
Accounting policies
Other operating income and costs comprise items secondary to the entities’ activities such as gain and losses on disposal of property, plant
and equipment, management fee, rental income, refunds of energy taxes etc.
5 Depreciation, amortisation and write downs before special items
Group Parent company
(DKK million) 2021 2020 2021 2020
Other intangible assets 37 38 - -
Land and buildings 31 37 2 2
Plant and machinery 82 84 - -
Fixtures and fittings, tools and equipment 33 30 - -
Total 183 189 2 2
Write downs amounts to DKK 7 million which has been reported as special items, see note 6.
6 Special items, net
Group Parent company
(DKK million) 2021 2020 2021 2020
Integration costs (11) - - -
Write down (7) - - -
Transaction and restructuring costs related to acquisitions (13) - - -
Total (31) - - -
Impact of special items on EBIT
Cost of goods sold (11) - - -
Sales costs (4) - - -
Other operating income and costs, net (9) - - -
Depreciation and amortisation (7) - - -
Total (31) - - -
Special items primarily relate to the acquisitions closed in 2021 and comprise integration costs, transaction and restructuring costs, as well
as write-down related to strategic replacement of the autoclaves in the Wittenborn factory in Germany planned for 2022.
Accounting policies
Special items include significant income and expenses of a special nature in terms of the Group’s revenue-generating activities that cannot
be attributed directly to the Group’s ordinary operating activities.
Special items also include significant non-recurring items, including gains and losses on the disposal of activities and associates and
transaction costs in a business combination. Significant restructuring of processes and structural adjustments are also included in special
items.
Special items are shown separately from the Group’s ordinary operations to facilitate a better understanding of the Group’s financial
performance.
Financial statements
71 | H+H Annual Report 2021
note 4-6
Notes – Income statement
7 Financial income
Group Parent company
(DKK million) 2021 2020 2021 2020
Interest income 3 2 2 3
Interest income from subsidiaries - - 17 18
Dividend from subsidiary - - 280 124
Past service costs relating to pension plans; see note 20 1 - - -
Total 4 2 299 145
Accounting policies
Financial income comprises interest income, capital gains, transactions denominated in foreign currencies, amortisation of financial assets,
and surcharges and allowances under the tax prepayment scheme etc.
Dividends from equity investments in subsidiaries are credited to the parent company’s income statement in the financial year in which they
are declared.
8 Financial expenses
Group Parent company
(DKK million) 2021 2020 2021 2020
Interest expenses 15 12 15 14
Interests expense, leases 3 4 - -
Interest expenses to subsidiaries - - 1 1
Interest on financial instruments 18 16 16 15
Financial expenses relating to pension plans; see note 20 2 2 - -
Past service costs relating to pension plans; see note 20 - 1 - -
Foreign exchange rate adjustments - 4 7 -
Other financial expenses 5 4 1 2
Total 25 27 24 17
Accounting policies
Financial expenses comprise interest expenses, past service costs, capital losses, impairment losses relating to securities, recirculation
of cumulative translation dierences of entities disposed of, payables and transactions in foreign currencies, and amortisation of financial
liabilities, including finance lease obligations etc.
9 Tax
Group Parent company
(DKK million) 2021 2020 2021 2020
Tax on profit from continuing operations 35 56 (6) (5)
Tax on other comprehensive income 11 (21) - -
Total 46 35 (6) (5)
Total tax can be broken down as follows:
Current tax for the year 70 64 (6) (5)
Adjustment relating to changes in tax rate (1) 2 - -
Adjustment of deferred tax 7 (26) 3 3
Change in valuation of tax assets (5) (8) (3) (3)
Prior-year adjustments (25) 3 - -
Total 46 35 (6) (5)
Current joint taxation contribution for the year - - (6) (5)
Tax on profit from continuing operations can be broken down as follows:
Calculated 22.0% (2020: 22.0%) tax on income from ordinary activities 78 68 57 25
Less tax in foreign Group entities compared with 22.0% rate (2020: 22.0%) (15) (12) - -
Tax eect of:
Change in valuation of tax assets (4) (8) (3) (3)
Change in tax rate - 2 - -
Non-deductible expenses/non taxable income 1 3 (60) (27)
Prior year adjustment (25) 3 - -
Total 35 56 (6) (5)
Financial statements
72 | H+H Annual Report 2021
note 7-9
Notes – Income statement
Accounting policies
Tax on profit comprises current tax and changes in deferred tax for the year. The portion that relates to profit for the year is recognised in the
income statement, and the portion that can be attributed to items in other comprehensive income or directly in equity is recognised in other
comprehensive income or directly in equity.
H+H International A/S is taxed jointly with all its Danish subsidiaries. The current Danish income tax is allocated among the jointly taxed
companies in proportion to their taxable income. Subsidiaries that utilise tax losses in other subsidiaries pay joint taxation contributions to
the parent company equivalent to the tax base of the utilised losses, while subsidiaries with tax losses that are utilised by other subsidiaries
receive joint taxation contributions from the parent company equivalent to the tax base of the tax losses utilised (full absorption). The jointly
taxed companies are taxed under the tax prepayment scheme.
Where the H+H Group receives a tax deduction in the calculation of taxable income in Denmark or abroad as a result of sharebased payment
schemes, the tax eect of these schemes is recognised in tax on profit. If the total deduction exceeds the total remuneration expense, the tax
eect of the excess deduction is recognised directly in equity.
The parent company is the administration company for the jointly taxed Danish companies. Pursuant to the rules on this contained in the
Danish Corporation Tax Act, all companies that are jointly taxed are thus liable to withhold tax at source on interest, royalties and dividends
for the jointly taxed companies for contingent liabilities. The Group’s Danish companies are further jointly and severally liable for joint
registration of VAT.
Approach to taxes
As recommended by the Danish Committee on Corporate Governance, H+H has adopted a tax policy. For more details on our approach to
taxes, we refer to our tax policy which can be found here: https://www.hplush.com/tax
In addition to the Committee’s best practice guidelines, the Global Sustainability Standard Board (GSSB) has issued GRI 207 TAX 2019.
The H+H tax policy addresses the essence of the Committee’s recommendations and the disclosures of GRI 207, and thereby forms the
foundation for a common tax approach for the H+H Group. In order to increase transparency, we present key figures on tax jurisdiction levels
below. Corporate income tax is based on IFRS reporting standards instead of GRI methodology to ensure internal coherence throughout the
annual report.
9 Tax – continued
Country-by-country key figures - IFRS
Group
(DKK million) 2021
Number of
employees
Total
employee
remuneration
Revenues
from
third-party
sales
Revenues
from
intragroup
transac-
tions with
other tax
juridictions
Property,
plant and
equipment
and
inventory
Balance
of intra-
company
debt
Corporate
income tax
paid on a
cash basis
Denmark 49 66 222 - 12 23 -
UK 243 115 884 - 267 135 22
Germany 462 226 946 205 1,146 (964) 13
Poland 776 135 737 11 452 108 32
Switzerland 20 17 110 - 145 25 5
Other countries* 22 11 121 - 4 1 2
Total 1,572 570 3,020 216 2,026 (672) 74
Current tax explanation on country level
Calculated
local
corporate
tax on
profit (loss)
before tax
Non-
taxable
income
and non-
deductable
costs, net
Deferred
tax
Other ad-
justments
Current
tax
Denmark (3) - 3 - -
UK (34) (4) 7 5 (26)
Germany 6 - (2) (7) (3)
Poland (40) 2 (2) 5 (35)
Switzerland (6) - 1 - (5)
Other countries* (1) - - - (1)
Total (78) (2) 7 3 (70)
* Other countries comprise Benelux, Sweden and Czech Republic
Financial statements
73 | H+H Annual Report 2021
Notes – Income statement
The Company’s revenue streams contain of contracts for sale of goods and related transport services. Change of control for contracts for
goods are satisfied upon shipment whereby the performance obligation is met instantly. Revenue relating to transport services is recognised
upon delivery of the goods to an agreed location whereby the performance obligation is met.
The transaction price is the amount to which H+H expects to be entitled in exchange for the transfer of goods and transport services. The
transaction price for delivery of goods and transport services are an integrated part of the contracts and the standalone selling prices are
directly observable. Accounting estimates are made for variable considerations which consist of customer rebates and bonusses. These are
allocated to the transaction price based on “The most likely amount”-method.
Payment terms mainly comprise of 30 days end of month, hence no significant financing component. Defect products and return pallets can
be redelivered and provisions has been recognised accordingly. For further description, please refer to note 21 “Provisions”
Accounting policies
Revenue from contracts for goods recognised in the income statement when the customer obtains control. Revenue relating to transport
services is recognised upon delivery of the goods to an agreed location. Revenue is recognised if the income can be measured reliably and
is expected to be received. Revenue is measured net of VAT and duties collected on behalf of third parties. All types of discount and rebate
granted are recognised in revenue.
Cost of goods sold comprise costs incurred in generating the revenue for the year. The trading entities recognise cost of sales and the
producing entities recognise production costs, relating to revenue for the year. This includes the direct and indirect cost of raw materials and
consumables, distribution and wages and salaries.
Sales costs comprise marketing costs etc. which includes costs of sales personnel, and advertising and exhibition costs.
Administrative costs include costs incurred during the year for management and administration, including costs for administrative sta,
oce premises and oce expenses. Administrative costs also include impairment of trade receivables.
10 Income statement classified by function
It is Group policy to prepare the income statement based on an adapted classification of costs by function in order to show EBIT before
special items. Depreciation, amortisation and impairment of property, plant and equipment and intangible assets are therefore classified by
function and presented on separate lines.
The table below shows an extract of the income statement adapted to show depreciation, amortisation and impairment classified by
function:
Group Parent company
(DKK million) 2021 2020 2021 2020
Revenue 3,020 2,654 - -
Cost of goods sold (2,238) (1,943) - -
Gross profit including depreciation and amortisation 782 711 - -
Sales costs (188) (201) - -
Administrative costs (201) (182) (66) (62)
Other operating income 18 12 52 47
Other operating costs (3) (8) - -
EBIT before special items 408 332 (14) (15)
Special items (31) - - -
EBIT 377 332 (14) (15)
Depreciation and amortisation comprise:
Amortisation of intangible assets 37 38 - -
Depreciation of property, plant and equipment 146 151 2 2
Total 183 189 2 2
Depreciation and amortisation are allocated to:
Production costs 123 125 - -
Sales costs 45 50 - -
Administrative costs 15 14 2 2
Total 183 189 2 2
Financial statements
74 | H+H Annual Report 2021
note 10
Notes – Income statement
11 Government grants
For 2021, H+H has not participated in any government grant schemes.
For 2020, H+H participated in three government grant schemes, in the UK, Germany and Poland, respectively. In the UK, H+H has
participated in the UK Government’s “Coronavirus Job Retention” scheme. This scheme has benefitted H+H by receiving grants from the
Government for employees who are placed on Furlough. Grants received has amounted to 80% of the wages up to GBP 2,500 per employee,
totaling DKK 13 million in 2020. H+H has also participated in government grant schemes for Germany and Poland where grants of DKK 1
million was received.
In total for 2020, grants of DKK 14 million was received which has been recognised in the income statement as “Cost of goods sold” by DKK 12
million and “Sales costs” by DKK 2 million.
As of 31 December 2021 and 31 December 2020, no grants are recognised as receivables in the balance sheet.
H+H has no unfulfilled conditions related to above schemes for the government grants received.
Accounting policies
Government grants is recognised in the income statement as income over the period necessary to match them with the related costs, for
which they are intended to compensate, on a systematic basis. A grant received as compensation for costs already incurred or for immediate
financial support, with no future related costs, is recognised as income in the period in which it is received. Government grants not received at
the balance sheet date are recognised as a receivable.
Government grants is recognised only when there is reasonable assurance that H+H will comply with any conditions attached to the grant,
and that the grant will be received.
12 Earnings per share (EPS)
Group
(DKK million) 2021 2020
Average number of shares 17,983,365 17,983,365
Average number of treasury shares (279,822) (86,350)
Average number of outstanding shares 17,703,543 17,897,015
Dilution from share options - -
Average number of outstanding shares, diluted 17,703,543 17,897,015
Profit/loss for the year (DKK million) 321 251
Attributable to non-controlling interest (11) (10)
Shareholders in H+H International A/S (DKK million) 310 241
Earnings per share (EPS) (DKK) 17.5 13.5
Diluted earnings per share (EPS-D) (DKK) 17.5 13.5
See calculation principle in note 1 under financial ratios
Financial statements
75 | H+H Annual Report 2021
note 11-12
Notes – Balance sheet
13 Intangible assets
Parent company
(DKK million) 2021 2020
Other
intangible
assets
Other
intangible
assets
Total cost at 1 January 3 -
Additions during the year 7 3
Total cost at 31 December 10 3
Total amortisation at 1 January - -
Amortisation for the year - -
Total amortisation at 31 December - -
Carrying amount at 31 December 10 3
Group
(DKK million) 2021
Goodwill
Customer
relations
Other
intangible
assets Total
Total cost at 1 January 239 324 75 638
Foreign currency translation adjustments - - 1 1
Additions from acquired companies, see note 25 153 49 3 205
Additions during the year - - 22 22
Disposals during the year - - (3) (3)
Total cost at 31 December 392 373 98 863
Total depreciation and amortisation at 1 January (28) (80) (61) (169)
Foreign currency translation adjustments - - - -
Amortisation for the year - (32) (5) (37)
Amortisation of disposals - - 3 3
Total amortisation and impairment losses at 31 December (28) (112) (63) (203)
Carrying amount at 31 December 364 261 35 660
(DKK million) 2020
Goodwill
Customer
relations
Other
intangible
assets Total
Total cost at 1 January 226 280 70 576
Foreign currency translation adjustments (4) (6) (7) (17)
Additions from acquired companies 17 50 - 67
Additions during the year - - 13 13
Disposals during the year - - (1) (1)
Total cost at 31 December 239 324 75 638
Total depreciation and amortisation at 1 January (30) (49) (58) (137)
Foreign currency translation adjustments 2 1 2 5
Amortisation for the year - (32) (6) (38)
Amortisation of disposals - - 1 1
Total amortisation and impairment losses at 31 December (28) (80) (61) (169)
Carrying amount at 31 December 211 244 14 469
Financial statements
76 | H+H Annual Report 2021
note 13
Notes – Balance sheet
13 Intangible assets – continued
Impairment testing
Management has tested goodwill for impairment in each of the cash-generating units to which such assets have been allocated.
Management has identified the following four cash-generating units;
2021
Cash-generating units and related goodwill Product
Year of
origin
DKK
million
Poland AAC & CSU 2003 22
Central Western Europe AAC 2006/20/21 198
Central Western Europe CSU 2018/19 144
UK AAC N /A -
Total 364
In 2021, goodwill of DKK 153 million was acquired in connection to the acquisitions of “Feuchtwangen” and “DOMAPOR”, both adding into the
Central Western Europe AAC cash-generating unit. Refer to note 25 “Business combinations” for further information on the purchase price
allocation.
Management is of the opinion that the lowest level of cash-generating unit to which the carrying amount of goodwill can be allocated is in
each CGU.
In both 2021 and 2020, the impairment test of goodwill showed no impairment.
Key assumptions
For the purpose of impairment testing the recoverable amount was defined as the value in use. The impairment tests were based on budget
for 2022 approved by the Board of Directors and strategy projections for the years 2023-2027 for all CGUs. The assumptions of the forecast
period are based on benchmarked external data and historic trends.
2021
Cash-generating units
Poland AAC
& CSU
Central
Western
Europe AAC
Central
Western
Europe CSU
Carrying amount of intangible assets, property, plant and equipment
at 31 December 2021 (DKK million) 415 873 828
Goodwill (DKK millon) 22 198 144
Estimated average annual growth in revenue 2022-2027 (CAGR) 5.5% 6.4% 1.8%
Estimated average annual growth in gross margin in percentage points 2022-2027 0.3% 0.3% 0.2%
WACC before tax (budget and terminal period, respectively) 13.0%/13.0% 8.7%/9.9% 9.8%/11.7%
WACC after tax (budget and terminal period, respectively) 10.5%/10.5% 6.9%/7.8% 7.2%/8.6%
2020
Cash-generating units
Poland AAC
& CSU
Central
Western
Europe AAC
Central
Western
Europe CSU
Carrying amount of intangible assets, property, plant and equipment
at 31 December 2020 (DKK million) 411 504 875
Goodwill (DKK millon) 22 45 144
Estimated average annual growth in revenue 2021-2026 (CAGR) 0.3% 3.3% 1.8%
Estimated average annual growth in gross margin in percentage points 2021-2026 0.5% -0.3% 0.1%
WACC before tax (budget and terminal period, respectively) 11.0%/11.0% 9.3%/11.1% 9.8%/11.7%
WACC after tax (budget and terminal period, respectively) 8.9%/8.9% 7.2%/8.6% 7.2%/8.6%
Financial statements
77 | H+H Annual Report 2021
Notes – Balance sheet
13 Intangible assets – continued
The weighted average growth rate used for the terminal period for the years after 2027 has been estimated at 1.0% - 2.0% (2020: 1.0% -
2.0%). The weighted average annual growth rate for the terminal period are assessed not to exceed long-term average growth rates on the
markets of the individual CGUs.
For all CGU’s, increasing gross margin has been estimated for the period 2022-2027, after which it is expected to be constant. The rising
gross margin assumes more expedient utilisation of production capacity as well as price increases.
The WACC is based on generally applied principles including the determination of return on equity and cost of debt. Components for the
return on equity, the marked risk premium, company specific risk premium and beta-values, is benchmarked to information provided by an
external valuation specialist. The risk-free rate for each CGUs for the budget period has been sourced from trading economics and is equal a
10-years government bond. The risk-free rate for the terminal period is normalised. The cost of debt is estimated based on the actual margin
in the bank agreements and the risk-free rate.
Sensitivity on changes in key assumptions
Group Management believes that likely changes in the key assumptions will not cause the carrying amount of goodwill and noncurrent assets
to exceed the recoverable amounts. Sensitivity analysis of impairment tests focuses on changes in discount rate (WACC), long-term growth
rate, revenue and EBITDA. All other factors are unchanged in the sensitivity analysis.
Based on sensitivity analyses, it is Management’s opinion that no probable change in any key assumptions would cause the carrying amounts
of CGUs to exceed the recoverable amount as at 31 December 2021.
Accounting policies
Goodwill is recognised initially in the balance sheet at cost. Subsequent to initial recognition, goodwill is measured at cost less accumulated
impairment losses. Goodwill is not amortised. On acquisition, goodwill is allocated to the cash-generating units which subsequently form
the basis for impairment testing. Goodwill and fair value adjustments in connection with the acquisition of a foreign entity with a functional
currency other than the H+H Group’s presentation currency are accounted for as assets and liabilities belonging to the foreign entity, and
translated on initial recognition into the foreign entity’s functional currency at the exchange rate at the transaction date. Any excess of the fair
value over the cost of acquisition (negative goodwill) is recognised in the income statement at the date of acquisition.
The carrying amount of goodwill is allocated to the H+H Group’s cash-generating units at the date of acquisition. The determination of cash-
generating units follows the H+H Group’s organisational and internal reporting structure.
Other intangible assets comprises of customer relations, order-book, trademarks, development projects and patent and licenses. Customer
relations, order book and trademarks acquired in connection with business combinations are measured at cost less cumulative amortisation
and impairment losses. They are amortised using a straight-line method over the expected useful life.
Development projects that are clearly defined and identifiable, and for which technical feasibility, adequate resources and a potential future
market or an application in the entity can be demonstrated, and which the entity intends to manufacture, market or use, are recognised as
intangible assets if the cost can be determined reliably and if there is reasonable certainty that the future earnings or the net selling price will
cover production costs, selling costs, administrative expenses and development costs. Other development costs are recognised in the income
statement as incurred.
Recognised development costs are measured at cost less cumulative amortisation and impairment losses. Cost comprises salaries,
amortisation and other expenses attributable to the H+H Group’s development activities and interest expenses on loans to finance
development projects that relate to the production period. On completion of the development work, development projects are amortised on
a straight-line basis over the estimated economic useful life from the date the asset is available for use. The amortisation period is normally
5-10 years. The amortisation base is reduced by any impairment losses.
Patents and licences are measured at cost less cumulative amortisation and impairment losses. Patents and licences are amortised on a
straight-line basis over the shorter of the remaining patent or contract period and the useful life.
Software and other intangible assets are depreciated on a straight-line basis over the expected useful lives of the assets as follows:
• Software 3-6 years
• ERP systems 8 years
• Customer relations 10 years
• Other intangible assets 1-10 years
Critical accounting estimates and judgements
Impairment of goodwill and non-current assets
Goodwill is tested for impairment annually, the first time before the end of the year of acquisition. The carrying amount of goodwill is tested
for impairment together with the other non-current assets of the cash-generating unit to which the goodwill has been allocated, and written
down to the recoverable amount in the income statement if the carrying amount exceeds the recoverable amount. As a rule, the recoverable
amount is determined as the present value of the expected future net cash flows from the entity or activity (cash-generating unit) to which
the goodwill relates.
The carrying amounts of other non-current assets are reviewed annually to determine whether there is any indication of impairment. If any
such indication exists, the asset’s recoverable amount is estimated. The recoverable amount of an asset is the higher of its fair value less
expected disposal costs and its value in use. The value in use is determined as the present value of expected future cash flows from the asset
or the cash-generating unit to which the asset belongs.
An impairment loss is recognised whenever the carrying amount of an asset or cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in the income statement under depreciation and amortisation. Impairment losses relating to goodwill
are not reversed. Impairment losses relating to other assets are reversed to the extent that the assumptions or estimates that led to the
impairment loss have changed. Impairment losses are only reversed to the extent that the asset’s new carrying amount does not exceed the
value the asset would have had after depreciation/amortisation if no impairment losses had been charged.
The calculation for impairment testing is based on budgets approved by Board of Directors. Cash flows after the budget period are
extrapolated using individual growth rates. The discount rate used for the calculation incorporates possible impacts of future risks.
Financial statements
78 | H+H Annual Report 2021
Notes – Balance sheet
14 Property, plant and equipment
Parent company
(DKK million) 2021 2020
Fixtures and
fittings,
tools and
equipment
Fixtures and
fittings,
tools and
equipment
Total cost at 1 January 9 9
Additions 1 -
Total cost at 31 December 10 9
Total depreciation at 1 January (2) 0
Depreciations for the year (2) (2)
Total amortisation at 31 December (4) (2)
Carrying amount at 31 December 6 7
Right-of-use assets included as
Additions 1 -
Depreciation 2 2
Carrying amount at 31 December 6 6
Group
(DKK million) 2021
Land and
buildings
Plant and
machinery
Other
equipment,
fixtures
and fittings
Property,
plant and
equipment
under con-
struction Total
Total cost at 1 January 1,290 2,298 260 100 3,948
Foreign currency translation adjustments 9 45 2 1 57
Additions from acquired companies, see note 25 71 38 - - 109
Transfers 2 17 - (19) -
Additions, including right-of-use assets 4 17 37 146 204
Disposals during the year (3) (35) (12) (1) (51)
Total cost at 31 December 1,373 2,380 287 227 4,267
Total depreciation and amortisation at 1 January (581) (1,656) (173) - (2,410)
Foreign currency translation adjustments (7) (35) (1) - (43)
Additions from acquired companies - - - - -
Depreciation for the year (31) (82) (33) - (146)
Depreciation of disposals 1 26 12 - 39
Total depreciation and impairment losses at 31 December (618) (1,747) (195) - (2,560)
Carrying amount at 31 December 755 633 92 227 1,707
Right-of-use assets included as
Additions 1 - 28 - 29
Depreciation (3) - (19) - (22)
Carrying amount at 31 December 84 - 46 - 130
Financial statements
79 | H+H Annual Report 2021
note 14
Notes – Balance sheet
14 Property, plant and equipment – continued
Group
(DKK million) 2020
Land and
buildings
Plant and
machinery
Other
equipment,
fixtures
and fittings
Property,
plant and
equipment
under con-
struction Total
Total cost at 1 January 1,279 2,374 199 99 3,951
Adjustment to opening (13) (116) 36 24 (69)
Foreign currency translation adjustments (31) (54) (3) (3) (91)
Additions from acquired companies 20 14 - - 34
Transfers 13 34 3 (50) -
Additions, including right-of-use assets 23 54 32 30 139
Disposals during the year (1) (8) (7) - (16)
Total cost at 31 December 1,290 2,298 260 100 3,948
Total depreciation and amortisation at 1 January (565) (1,703) (125) - (2,393)
Adjustment to opening 8 93 (26) - 75
Foreign currency translation adjustments 12 34 2 - 48
Additions from acquired companies - - - - -
Depreciation for the year (37) (84) (30) - (151)
Depreciation of disposals 1 4 6 - 11
Total depreciation and impairment losses at 31 December (581) (1,656) (173) - (2,410)
Carrying amount at 31 December 709 642 87 100 1,538
Right-of-use assets included as
Additions 7 - 11 - 18
Depreciation (3) - (16) - (19)
Carrying amount at 31 December 88 - 38 - 126
Right-of-use-assets
The Group leases land and buildings, oces, cars and forklift trucks. Lease terms are negotiated on an individual basis and contain a wide
range of dierent terms and conditions.
Accounting policies
Land and buildings, plant and machinery, fixtures and fittings, and tools and equipment are measured at cost less accumulated depreciation
and impairment losses.
Cost comprises purchase price and any costs directly attributable to the acquisition up to the date the asset is available for use. The cost
of self-constructed assets comprises direct and indirect costs of materials, components, subsuppliers and labour. Cost is increased by
estimated costs for dismantling and removal of the asset and restoration costs, to the extent that they are recognised as a provision, and
interest expenses on loans to finance the production of property, plant and equipment that relates to the production period. The cost of a
combined asset is divided into separate components that are depreciated separately if the components have dierent useful lives.
Subsequent costs, for example in connection with replacement of part of an item of property, plant or equipment, are recognised in the
carrying amount of the asset if it is probable that future economic benefits will flow to the H+H Group from the expenses incurred. The
replaced part is derecognised in the balance sheet, and the carrying amount is transferred to the income statement. All other expenses for
general repair and maintenance are recognised in the income statement as incurred.
Property, plant and equipment are depreciated on a straight-line basis over the expected useful lives of the assets as follows:
• Production buildings 30-50 years
• Oce buildings 30-50 years
• Production equipment, autoclaves, mills, cutting machines and moulds 10-30 years
• Plant, machinery and other equipment 5-20 years
• Vehicles, fixtures and IT equipment 3-10 years
• Land is not depreciated
The main part of the Group's non-current assets comprises of production equipment, autoclaves, mills, cutting machines, presses and
moulds which are depreciated over a period of 10-30 years.
The depreciation base is determined taking into account the asset’s residual value and is reduced by any impairment losses. The residual
value is determined at the date of acquisition and reviewed annually. Depreciation ceases if the residual value of an asset exceeds its carrying
amount. The eect on depreciation of any changes in depreciation period or residual value is recognised prospectively as a change in
accounting estimates.
Leases
At the commencement date, the Group recognises a lease liability and a corresponding right-of-use asset at the same amount, except for
short-term leases of 12 months or less and leases of low-value assets. The interest rate implicit in the lease or the H+H Group’s incremental
borrowing rate is used as the discount rate for calculating the lease liability and a corresponding right-of-use asset.
Financial statements
80 | H+H Annual Report 2021
Notes – Balance sheet
14 Property, plant and equipment – continued
A right-of-use asset is initially measured at cost, which equals the initial lease liability and initial direct costs less any lease incentives
received. The Group has applied the practical expedient option allowed under IFRS by using a portfolio approach for the recognition of lease
contracts related to assets of the same nature and with similar lease terms, i.e. cars and trucks.
Subsequently, the right-of-use asset is measured at cost less depreciation and impairment losses, and adjusted for remeasurement of the
lease liability.
The right-of-use asset is depreciated over the earlier of the lease term or the useful life of the asset. The impairment testing of right-of-use
assets follows the same principles as those applied for property, plant and equipment. Right-of-use assets are recognised as property, plant
and equipment.
The Group has elected not to recognise right-of-use assets and liabilities for leases with a term of 12 months or less and leases of low-value
assets. Lease payments related to such leases are recognised in the income statement as an expense on a straight-line basis over the lease
term.
Critical accounting estimates and judgements
Lease and service contracts
At inception of a contract, Management assesses whether the contract is or contains a lease. Management considers the substance of any
service being rendered to classify the arrangement as either a lease or a service contract. Importance is whether fulfilment of the contract
depends on the use of specific assets. The assessment involves judgement of whether the Group obtains substantially all the economic
benefits from the use of the specified asset and whether it has the right to direct how and for what purpose the asset is used. If these criteria
are satisfied at the commencement date, a right-of-use asset and a lease liability are recognised in the statement of financial position.
In determining the lease term, Management considers all the facts and circumstances that create an economic incentive to exercise an
extension option or not to exercise a termination option. Extension or termination options are only included in the lease term if the lease is
reasonably certain to be extended or not terminated. The term is reassessed if a significant change in circumstances occurs. The assessment
of purchase options follows the same principles as those applied for extension options.
15 Deferred tax
Group Parent company
(DKK million) 2021 2020 2021 2020
Deferred tax at 1 January (112) (125) 10 10
Addition from acquisition (28) (20) - -
Prior years adjustments 25 - - -
Foreign exchange adjustments (3) 1 - -
Eect of change in tax rate 1 (2) - -
Change in deferred tax (7) 26 - -
Valuation of tax asset 4 8 - -
Deferred tax at 31 December (120) (112) 10 10
Group Parent company
(DKK million) 2021 2020 2021 2020
Deferred tax relates to:
Non-current assets (173) (188) - -
Current assets (1) (1) - -
Liabilities 26 45 - -
Tax loss carry-forwards 28 32 10 10
Total (120) (112) 10 10
Breakdown of deferred tax and recognition in the balance sheet:
Deferred tax assets 17 18 10 10
Deferred tax liabilities (137) (130) - -
Total (120) (112) 10 10
No deferred tax has been recognised on the dierence between the cost of equity investments and the carrying amount. This is because the
shareholdings in the equity investments are all considered to be ”shares in a subsidiary”, and any gain/loss is therefore not taxable.
The tax value of loss carry-forwards has been recognised as deferred tax assets in the companies where, based on budget and forecasts,
it is considered very likely that this can be utilised in future earnings and a history of profit before tax within the last three to five years has
been verified. A tax value of loss carry-forwards of DKK 22 million at 31 December 2021 (2020: DKK 27 million) has not been recognised as
deferred tax assets, as these are not considered likely to be utilised. The carry-forward losses relate to Germany, Denmark and Sweden.
The parent company has special carried-forward losses related to sale of property and shares with limited possibilities of use with a taxable
value of DKK 11 million (2020: DKK 11 million) which are not recognised.
Financial statements
81 | H+H Annual Report 2021
note 15
15 Deferred tax – continued
Accounting policies
Income tax and deferred tax: Current tax payable and receivable is recognised in the balance sheet as tax computed on the taxable income
for the year, adjusted for tax on the taxable income of prior years and for tax paid on account.
Deferred tax is measured using the balance sheet liability method, providing for all temporary dierences between the carrying amount and
tax base of assets and liabilities. However, the following temporary dierences are not recognised: Goodwill not deductible for tax purposes
and other items – apart from business combinations – where temporary dierences have arisen at the date of acquisition that aect neither
profit nor taxable income. Where alternative tax rules can be applied to compute the tax base, deferred tax is measured on the basis of
Management’s planned use of the asset or settlement of the liability respectively.
Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised as other non-current assets at the value at which they
are expected to be utilised either by elimination against tax on future earnings or by set-o against deferred tax liabilities within the same
legal tax entity and jurisdiction.
Deferred tax assets and liabilities are oset if the H+H Group has a legally enforceable right to oset current tax liabilities and assets or
intends to settle current tax liabilities and assets on a net basis or to realise tax assets and liabilities simultaneously. Adjustment of deferred
tax is made in respect of elimination of unrealised intra-group profits and losses.
Deferred tax is measured on the basis of the tax rules and at the tax rates that will apply under the legislation enacted at the balance sheet
date in the respective countries when the deferred tax is expected to crystallise in the form of current tax. Changes in deferred tax as a result
of changes in tax rates are recognised in the income statement.
Under the joint taxation rules, H+H International A/S, as the administration company, becomes liable to the tax authorities for the
subsidiaries’ income taxes as the subsidiaries pay their joint taxation contributions. Joint taxation contributions payable and receivable are
recognised in the balance sheet under receivables from/payables to subsidiaries.
Critical accounting estimates and judgements
Recovery of deferred tax assets: Deferred tax assets are recognised for all unutilised tax loss carry-forwards to the extent it is considered
likely that the losses can be oset against taxable income in the foreseeable future. The amount recognised for deferred tax assets is based
on estimates of the likely date and size of future tax loss carry-forwards.
16 Investments in subsidiaries
Parent company
(DKK million) 2021 2020
Acquisition cost at 1 January 1,297 1,319
Additions - 1
Disposals - (23)
Cost at 31 December 1,297 1,297
Impairment losses at 1 January (67) (67)
Reversal of previous write-down - -
Reversal in connection with disposals - -
Impairment losses at 31 December (67) (67)
Carrying amount at 31 December 1,230 1,230
For 2020, additions comprise of a capital injection for H+H Sverige AB of DKK 1 million and disposals of DKK 23 million related to a capital
decrease for Hunziker Kalksandstein AG.
The cost of investments in subsidiaries was tested for impairment at the end of 2021. The recoverable amount of the equity investments at
31 December 2021 is based on the value in use, which has been determined using expected net cash flows based on estimates for the years
2022-2027 and a WACC after tax of 6.9%-10.5% (2020: 7.2-8.9%). The weighted average growth rate used for extrapolating expected future
net cash flows for the years after 2027 has been estimated at 2.0% (2020: 2.0%). It is estimated that the growth rate will not exceed the long-
term average growth rate in the respective company’s markets; see note 13 for further information on the impairment tests.
Notes – Balance sheet
Financial statements
82 | H+H Annual Report 2021
note 16
16 Investments in subsidiaries – continued
2021 2020
Registered
oce
Equity
interest, %
Equity
interest, %
KWAY Holding Limited* UK 100 100
H+H Deutschland GmbH** Germany 100 100
Hunziker Kalksandstein AG Switzerland 100 100
H+H Danmark A/S Denmark 100 100
HHI A/S af 3. maj 2004 Denmark 100 100
H+H Sverige AB Sweden 100 100
H+H Polska Sp. z o.o.*** Poland 100 100
H+H Benelux B.V. Netherlands 100 100
Diverse af 29.9.2011 ApS Denmark 100 100
* This activity comprises ownership of H+H UK Holding Limited and thus the activities of H+H UK Limited.
** This activity comprises ownership of H+H Kalksandstein GmbH, 51 % ownership of Baustowerke Dresden GmbH & Co. KG, 51% ownership of Porenbetonwerk
Laussnitz GmbH & Co. KG. (acquired January 2020) and 52.5% ownership of DOMAPOR Baustowerke GmbH & Co. KG. (acquired December 2021)
*** This activity comprises ownership of Grupa Prefabet S.A.
The above list does not include indirectly owned companies without any activities.
Impairment of financial assets
Loans to related and other parties, lifetime expected credit losses (ECL) has been provided for them upon initial application of IFRS 9 until
these financial assets are derecognised as it was determined on initial application of IFRS 9 that it would require undue cost and eort to
determine whether their credit risk has increased significantly since initial recognition to the date of initial application of IFRS 9.
In determining the expected credit losses for these assets, we have taken into account the historical default experience, the financial position
of the counterparties and considering various external sources of actual and forecast economic information, as appropriate, in estimating the
probability of default of each of these financial assets occurring within their respective loss assessment time horizon, as well as the loss upon
default in each case.
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the
loss allowance for these financial assets.
Accounting policies
Equity investments in subsidiaries in the parent company’s financial statements: Equity investments in subsidiaries are measured at cost. If
there is any indication of impairment or reversal of prior year’s impairment, an impairment test is carried out as described in note 13. Cost is
written down to the recoverable amount whenever the carrying amount is higher.
Notes – Balance sheet
17 Inventories/cost of goods sold
Group Parent company
(DKK million) 2021 2020 2021 2020
Raw materials and consumables 114 92 - -
Finished goods and goods for resale 207 190 - -
Total 321 282 - -
Write-downs recognised in the inventories above have developed as follows:
Write-downs at 1 January 24 21 - -
Foreign exchange adjustments - (1) - -
Write-downs for the year 10 5 - -
Realised during the year (2) (1) - -
Reversals (1) - - -
Total 31 24 - -
Cost of goods sold comprised:
Direct costs 1,199 1,042 - -
Wages and salaries 342 311 - -
Overheads 216 180 - -
Distribution 348 280 - -
Write-downs for the year 10 5 - -
Total 2,115 1,818 - -
Accounting policies
Inventories are measured at cost using the FIFO method. Where the net realisable value is lower than the cost, inventories are written down to
this lower value. In the case of goods for resale, and raw materials and consumables, cost comprises purchase price plus expenses incurred in
bringing the inventories to their existing location and condition.
In the case of finished goods, cost comprises raw materials, consumables, direct labour and production overheads. Production overheads
comprise indirect materials and labour as well as maintenance and depreciation of the machinery, factory buildings and equipment used in
the production process, and the cost of factory administration and management.
The net realisable value of inventories is determined as the selling price less any costs of completion and costs incurred to execute the sale.
The net realisable value is determined on the basis of marketability, obsolescence and developments in expected selling price.
Financial statements
83 | H+H Annual Report 2021
note 17
Notes – Balance sheet
18 Trade and other receivables
Group Parent company
(DKK million) 2021 2020 2021 2020
Trade receivables, gross 199 140 - -
Rebates, bonusses and write-downs (53) (60) - -
Group debtors - - 72 56
Other receivables 37 29 1 1
Total 183 109 73 57
In the parent company, group debtors comprise of receivable management fee.
Other receivables include a fully impaired receivable from sale of land and property in Poland rent deposits, VAT, other indirect taxes etc. and
fall due within one year of the balance sheet date.
Group Parent company
(DKK million) 2021 2020 2021 2020
Age analysis of trade receivables (gross):
Not past due 138 107 - -
0-30 days 59 29 - -
31-90 days - 1 - -
91-180 days - - - -
Over 180 days 2 3 - -
Total trade receivables 199 140 - -
Write-downs relating to receivables, year-end 3 3 - -
The average credit period on sales of goods is approximately 30 days.
The expected credit losses on trade receivables are estimated using a provision matrix and the Group has recognised a loss allowance of
100% against all receivables over 180 days because historical experience has indicated that these receivables are generally not recoverable.
Receivables that are not past due are predominantly deemed to have a high credit quality and security is normally not required. The Group’s
customers are typically large well-consolidated builders’ merchants and housebuilders, and customers are credit rated on a regular basis.
Only limited security had been provided at 31 December 2021.
Write-downs of receivables
Group Parent company
(DKK million) 2021 2020 2021 2020
Write-downs at 1 January 3 3 - -
Write-downs for the year - 1 - -
Reversals - (1) - -
Write-downs relating to receivables at 31 December 3 3 - -
Write-downs relating to receivables at 31 December 3 3 - -
Accounting policies
Receivables are measured at amortised cost, which in all material respects corresponds to the nominal value less a loss allowance equal
expected credit loss. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument. Expected credit losses on receivables are recognised as other external expenses.
The expected credit losses on receivables are estimated using a provision matrix based on the Group’s historical credit loss experience,
adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including time value of money where appropriate.
Prepayments recognised under assets comprise expenses incurred in respect of subsequent financial years. Prepayments are measured at
amortised cost.
Financial statements
84 | H+H Annual Report 2021
note 18
Notes – Balance sheet
19 Share capital and treasury shares
Number
Nominal value,
DKK million
2021 2020 2021 2020
Share capital at 1 January 17,983,365 17,983,365 180 180
Movements - - - -
Share capital at 31 December 17,983,365 17,983,365 180 180
On 22 June 2018, H+H International A/S increased its share capital by a nominal amount of DKK 71,933,460 from DKK 107,900,190 to DKK
179,833,650. H+H International A/S’s total nominal share capital is DKK 179,833,650 divided into 17,983,365 shares of nominal DKK 10 each,
corresponding to 17,983,365 votes.
There have been no movements in the share capital in the last five years except for the above.
Treasury shares
Number
Nominal
value,
DKK
million
%
of share
capital,
year-end
Holding at 1 January 2020 105,099 1.05 (0.6)
Purchased during the year 30,000 0.30 (0.2)
Granted due to matching share programme in 2017 (37,153) (0.37) 0.2
Holding at 31 December 2020 97,946 0.98 (0.6)
Purchased during the year 474,153 4.79 (2.7)
Granted due to matching share programme in 2018 (27,746) (0.28) 0.2
Holding at 31 December 2021 544,353 5.49 (3.1)
On 4 March 2021, H+H International A/S initiated a share buy-back programme in compliance with Article 5 of Regulation (EU) No 596/2014
of the European Parliament and of the Council of 16 April 2014 on Market Abuse and Commission Delegated Regulation (EU) 1052/2016 of
8 March 2016 (the “Safe Harbour Regulation”). On 18 March 2021, the share buy-back programme was increased by DKK 15 million, thereby
increasing the maximum aggregate purchase price of the shares to be bought back under the programme to DKK 115 million. The share buy-
back programme is in full described in Company Announcements no. 402 and no. 410.
The share buy-back programme is expected to be realised over a 12-month period, starting from 4 March 2021. Under the share buy-back
programme, H+H may repurchase shares up to a maximum amount of DKK 115 million, and no more than 1,728,136 shares, corresponding to
approximately 9.6 percent of the share capital of the H+H.
In 2021, 474,153 treasury shares were purchased at a value of DKK 95 million.
All the treasury shares are owned by H+H International A/S. Treasury shares not related to the share buy-back program are acquired in order
to hedge liabilities related to the share programmes. Refer to note 3 for further information on the share programmes.
Accounting policies
Equity: Proposed dividends are recognised as a liability at the date of adoption at the annual general meeting (declaration date).
Treasury shares: Acquisition costs, disposal costs and dividends relating to treasury shares are recognised directly in retained earnings under
equity. Capital reductions as a result of cancellation of treasury shares reduce the share capital by an amount equivalent to the nominal value
of the shares. Proceeds from the sale of treasury shares in H+H International A/S in connection with the exercise of share options are taken
directly to equity.
20 Pension obligations
Under defined contribution plans, the employer is obliged to pay a specific contribution (e.g. a fixed amount or a fixed percentage of salary).
Under such plans, the Group does not bear the risk associated with future developments in interest rates, inflation, mortality and disability.
Under defined benefit plans, the employer is obliged to pay a specific amount (e.g. a retirement pension as a fixed amount or a fixed
percentage of final salary). Under such plans, the Group bears the risk associated with future developments in interest rates, inflation,
mortality and disability.
The Danish entities’ pension obligations are insured. Some foreign entities’ pension obligations are also insured. Foreign entities that are not
insured or only insured in part (defined benefit plans) calculate the obligation actuarially at present value at the balance sheet date. These
pension plans are fully or partly funded in pension funds for the employees. In the consolidated financial statements, an amount of DKK 85
million (2020: DKK 147 million) has been recognised under liabilities in respect of the Group’s obligations to existing and former employees
after deduction of the assets associated with the plans.
In the UK, the actuarial valuation of the defined benefit plan at 31 December 2021 showed a net asset of DKK 17 million (GBP 2.0 million),
consequently triggering IFRIC 14 for H+H UK to recognise future committed pension contributions of the scheme as they do not have
unconditional right to a refund. Value recognised amounts to DKK 79 million (GBP 8.9 million).
In the consolidated income statement, an amount of DKK 7 million (2020: DKK 8 million) has been recognised in respect of expenses relating
to insured plans (defined contribution plans). For non-insured plans (defined benefit plans), an amount of DKK 0 million (2020: DKK 3 million)
has been recognised in the consolidated income statement as financial expenses.
The Group has defined benefit plans in the UK, Germany and Switzerland. The UK and Swiss pension plans are managed by a pension fund
– legally separate from the Company – to which payments are made, whereas the German pension plans are unfunded. The board of the UK
pension fund is composed of two representatives appointed by the employer, two elected by the pension fund members and two professional
independent members.
The board of the UK pension fund is required by law and by articles of association to act in the interest of the pension fund members. The
board of the UK pension fund is responsible for the investment policy with regard to the plan assets. Under the pension plan, employees are
Financial statements
85 | H+H Annual Report 2021
note 19-20
Notes – Balance sheet
entitled to post-retirement annual payments amounting to 1/60 of the final pensionable salary for each year of service before the retirement
age of 65. In addition, the service period is limited to 40 years, resulting in a maximum yearly entitlement (lifetime annuity) of 2/3 of the final
pensionable salary.
The defined benefit pension fund in the UK typically exposes the Company to actuarial risks, such as investment, interest rate, inflation
and longevity. H+H Celcon Pension Fund is supervised by an independent corporate trustee, H+H Celcon Pension Fund Trustee Limited. In
accordance with the legislation governing pension funds, the corporate trustee must ensure among other things that a limited actuarial
calculation of the pension obligations is carried out each year.
Every 3 years a triennial valuation take place. This valuation is based on more prudent assumptions than used under IAS 19.
The updated triennial valuation, postponed from April 2020, was finally agreed on 27 January 2022, with the Actuarial certificate signed on 31
January 2021, replacing the triennial valuation from April 2017 (current). The updated triennial valuation showed a deficit of DKK 143 million
(GBP 16.5 million), a decreased deficit compared to the triennial valuation from April 2017 of DKK 173 million (GBP 20.0 million).
The updated repayment schedule runs from April to April and H+H UK Limited is obliged to pay core contributions of DKK 35 million (GBP
4.00 million) in 2021/22, DKK 35 million (GBP 4.00 million) in 2022/23, DKK 28 million (GBP 3.21 million) in 2023/24 and DKK 26 million
(GBP 3.03 million) in 2024/25.
The UK pension fund was closed to new entrants in June 2007 and to the accrual of future service benefits in December 2011.
The most recent actuarial valuations (based on IAS 19R) of plan assets and the present value of the defined benefit obligation in UK were
carried out at 31 December 2021 by Mr Oscar Brown, Fellow of the UK Institute of Actuaries (Axis Actuarial Consulting Ltd.), in Germany by
AON and in Switzerland by Swiss Life. The present value of the defined benefit obligation, and the related service and past service cost, were
measured using the projected unit credit method.
The UK pension fund has been replaced by a defined contribution pension scheme where the Company is not subject to any ongoing
investment, interest rate or mortality risk.
20 Pension obligations – continued
Group
(DKK million) 2021 2020
Pensions and similar obligations:
Present value of fully or partly funded defined benefit plans 812 867
Fair value of plan assets 816 730
(Surplus)/Deficit (4) 137
Present value of unfunded defined benefit plans recognised in the balance sheet 10 10
Future committed pension contribution (UK) 79 -
Net obligation recognised in the balance sheet 85 147
Development in present value of defined benefit obligation:
Obligation at 1 January 877 742
Foreign exchange adjustments 65 (44)
Calculated interest on obligation 11 12
Past service costs (1) -
Service costs 2 2
Gains/losses as a result of changes in economic assumptions (102) 122
Gains/losses as a result of changes in demographic assumptions (2) (12)
Empirical changes (4) 82
Pension paid by employees 3 3
Pension paid (27) (30)
Obligation at 31 December 822 877
Breakdown of the present value of defined benefit obligation:
Present value of fully or partly funded defined benefit obligations 812 867
Present value of unfunded defined benefit obligations 10 10
Obligation at 31 December 822 877
Financial statements
86 | H+H Annual Report 2021
Notes – Balance sheet
20 Pension obligations – continued
Group
(DKK million) 2021 2020
Development in fair value of plan assets:
Plan assets at 1 January 730 678
Foreign exchange adjustments 54 (40)
Calculated interest income 10 12
Return on plan assets over and above the calculated interest 17 81
The Group's contributions to plan assets 29 26
The employee's contributions to plan assets 3 3
Pensions paid (27) (30)
Plan assets at 31 December 816 730
Pension costs relating to the current financial year, recognised as sta costs:
Pension costs relating to defined contribution plans 7 8
Total pension costs 7 8
Financial costs relating to the defined benefit plans for the current year:
Past service costs (1) -
Calculated interest on obligation (11) (12)
Calculated interest on plan assets 10 10
Net interest on defined benefit plans (2) (2)
Pension costs recognised in other comprehensive income:
Gains/losses as a result of change in economic assumptions 102 (122)
Gains/losses as a result of change in demographic assumptions 2 13
Return on plan assets over and above the calculated interest 17 81
Future committed pension contribution (79) -
Changes due to empirical changes 4 (82)
Total 47 (110)
The cost has been recognised in the income statement under sta costs; see note 3. Costs recognised under production costs amount to
DKK 3 million (2020: DKK 4 million), costs recognised under sales and distribution costs amount to DKK 0 million (2020: DKK 1 million) and
costs recognised under administrative costs amount to DKK 4 million (2020: DKK 3 million).
Group
(DKK million) 2021 2020
Plan assets can be broken down as follows:
Diversified Growth Fund 499 506
Liability Driven Investment 284 196
Alternatives 30 28
Cash 3 -
Total 816 730
All plan assets in the UK, DKK 786 million (2020: DKK 703 million), are investments held in LGIM funds, which in turn invest directly in highly
rated assets that are traded on a stock exchange. Asset of another DKK 30 million (2020: DKK 27 million) relates to the Swiss pension plan.
Group
(DKK million) 2021 2020
Return on plan assets
Actual return on plan assets 27 93
Calculated interest on plan assets 10 12
Actuarial gain (loss) on plan assets 17 81
The average assumptions used for the actuarial calculation related to the UK pension at the balance
sheet date can be stated as follows:
Discount rate (avg.) 1.9% 1.2%
Expected inflation rate 3.1% 3.0%
Members’ life expectancy from retirement age (years) 23.0 23.0
Sensitivity analysis
The table below shows the sensitivity of the UK pension obligation to changes in the key assumptions for determination of the obligation
on the balance sheet date. The H+H Group is also exposed to developments in the market value of the plan assets. The key actuarial
assumptions in determination of the pension obligation relate to interest rate level, pay increases and mortality.
Financial statements
87 | H+H Annual Report 2021
Notes – Balance sheet
20 Pension obligations – continued
The analysis is based on the reasonably likely changes which can be expected on the balance sheet date, provided that the other parameters
in the calculations are unchanged and not subject to consequential changes:
Group
(DKK million) 2021 2020
Sensitivity relative to discount rate:
If the discount rate falls by 0.1 percentage point, the pension obligation will increase by 15 17
Sensitivity relative to inflation:
If the inflation rate increases by 0.1 percentage point, the pension obligation will increase by 8 9
Sensitivity relative to life expectancy from retirement age:
If the life expectancy from retirement age increases by 1 year, the pension obligation will increase by 35 33
The Group expects to pay DKK 35 million into the defined benefit pension plan in 2022 (2021: DKK 27 million).
Group
(DKK million) 2021 2020
The pension obligation is expected to fall due as follows:
0-1 year 28 30
1-5 years 112 119
Over 5 years 682 728
Total 822 877
Actuarial assumptions
Discount rate
The discount rate is based on high-quality corporate bonds, and an adjustment has been made to reflect the fact that the duration of the
bonds does not correspond to the duration of the pension obligation
Price inflation
Inflation is based on market expectations for inflation over the duration of the pension liabilities and is calculated as a single equivalent rate.
Demographic assumptions are based on the latest available mortality projection model.
Accounting policies
Pension obligations: The H+H Group has entered into pension agreements and similar agreements with some of its employees. Obligations
relating to defined contribution plans are recognised in the income statement over the vesting period, and any contributions payable are
recognised in the balance sheet as other payables.
In the case of defined benefit plans, the value in use of future benefits to be paid under the plan is determined actuarially on an annual basis.
The value in use is determined on the basis of assumptions concerning future trends in factors such as salary levels, interest rates, inflation
and mortality.
The value in use is determined only for the benefits attributable to service already rendered to the H+H Group. The actuarially determined
value in use less the fair value of any plan assets is recognised in the balance sheet under pension obligations.
The pension costs for the year is recognised in the income statement based on actuarial estimates and the financial outlook at the start of the
year. Past service costs are recognised in the income as a financial item. Dierences between the expected development in plan assets and
obligations and the realised values determined at year-end are designated as actuarial gains or losses and recognised in other comprehensive
income.
Critical accounting estimates
Defined benefit pension plans: The present value of pension obligations depends on the actuarial assumptions made. These assumptions
comprise the discount rate, inflation rate, estimated return on plan assets, future salary increases, mortality and future developments in
pension obligations.
All assumptions are reviewed at the reporting date. Any changes in the assumptions will aect the carrying amount of the pension
obligations.
Financial statements
88 | H+H Annual Report 2021
Notes – Balance sheet
21 Provisions
Group
(DKK million) 2021 2020
Provisions at 1 January 40 44
Foreign exchange adjustments - (1)
Additions from acquired companies 11 -
Provisions for the year 6 8
Utilised during the year (11) (10)
Reversals during the year - (1)
Provisions at 31 December 46 40
Breakdown of the provisions at 31 December:
Warranty obligations 3 3
Obligations relating to restoration of sites 35 25
Onerous contracts 2 4
Restructuring 2 -
Other provisions 4 8
Total 46 40
Expected maturity of provisions:
Non-current liabilities 41 34
Current liabilities 5 6
Total 46 40
H+H’s subsidiaries provide normal warranties in respect of products supplied to customers. The provision for warranty obligations thus
relates to warranties provided in respect of products supplied prior to the balance sheet date. The warranty period varies depending on
normal practice in the markets in question. The warranty period is typically between one and five years. Warranty obligations have been
determined separately for each company based on normal practice in the market in question and historical warranty costs. At 31 December
2021, warranty obligations relate predominantly to Germany and Poland.
The obligation in respect of restoration of sites relates to H+H’s sites in Germany and Poland. The obligation has been calculated on the basis
of external assessments of the restoration costs. Additions from acquired companies also comprises restoration obligations.
Accounting policies
Provisions are recognised when, as a result of an event occurring before or at the balance sheet date, the H+H Group has a legal or
constructive obligation, the settlement of which is expected to result in an outflow from the company of resources embodying economic
benefits.
The measurement of provisions is based on Management’s best estimate of the amount expected to be required to settle the obligation.
In connection with the measurement of provisions, the costs required to settle the obligation are discounted to net present value if this has
a material eect on the measurement of the obligation. A pre-tax discount rate is applied that reflects the general interest rate level plus the
specific risks attached to the provision. The changes in present values during the financial year are recognised under financial expenses.
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data.
A provision for restructuring is recognised when a detailed formal plan for the restructuring has been made public, no later than the balance
sheet date, to those aected by the plan.
A provision for onerous contracts is recognised when the benefits expected to be derived by the H+H Group from a contract are lower than
the unavoidable costs of meeting its obligations under the contract.
If the H+H Group has an obligation to dismantle or remove an asset or restore the site on which the asset has been used, a provision
equivalent to the present value of the expected future expenses is recognised.
Financial statements
89 | H+H Annual Report 2021
note 21
Notes – Balance sheet
22 Credit institutions
Group Parent company
(DKK million) 2021 2020 2021 2020
Bank loans, non-current 744 611 647 574
Bank loans, current - - - -
Amortised borrowing costs (1) (2) (1) (2)
Total 743 609 646 572
Change in borrowings from financing activitites:
Group Parent company
(DKK million) 2021 2020 2021 2020
Borrowings 1 January 609 558 572 545
Change in borrowings 134 51 74 27
Borrowings 31 December 743 609 646 572
Change in lease liabilities:
Group Parent company
(DKK million) 2021 2020 2021 2020
Lease liabilities 1 January 102 111 6 7
Increase of lease liabilities 29 17 1 -
Repayment of lease liabilities (26) (20) (1) (1)
Foreign exchange adjustments 1 (6) - -
Lease borrowings 31 December 106 102 6 6
Maintenance of the committed credit facilities is conditional upon compliance with a number of financial covenants; see note 26.
Accounting policies
Bank loans etc. are recognised at the date of borrowing at the proceeds received net of transaction costs incurred. In subsequent periods, the
financial liabilities are measured at amortised cost using the eective interest rate method. Accordingly, the dierence between the proceeds
and the nominal value is recognised in the income statement under financial expenses over the term of the loan.
The lease liability is measured at the present value of the remaining lease payments at the reporting date, discounted using the incremental
borrowing rate for similar assets, taking into account the terms of the leases. A remeasurement of the lease liability, for example a change in
the assessment of an option to purchase, results in a corresponding adjustment of the related right-ofuse assets.
Extension or termination options are included in the lease term if the lease is reasonably certain to be extended or not terminated.
Consequently, all cash outflows that are reasonably certain to impact the future cash balances are recognised as lease liabilities at initial
recognition of lease contracts. The Group reassesses the circumstances leading to it not recognising extension or termination options on an
ongoing basis.
Financial statements
90 | H+H Annual Report 2021
note 22
Notes – Supplementary information
23 Contingent liabilities
Taxes and duties
The parent company is the administration company for the jointly taxed Danish companies. Pursuant to the rules on this contained in the
Danish Corporation Tax Act, the parent company is thus liable to withhold tax at source on interest, royalties and dividends for the jointly
taxed companies for contingent liabilities, and to withhold corporation tax from 1 January 2013. The Group’s Danish companies are further
jointly and severally liable for joint registration of VAT.
Financial guarantee
The parent company H+H International A/S acts as guarantor for the subsidiaries’ drawdowns on the Group’s Global Cash Pool facility.
Subsidiaries drawdowns at 31 December 2021 amounts to DKK 108 million (2020: DKK 66 million).
In addition hereto, third party guarantees provided by H+H International A/S and its subsidiaries amounts to DKK 65 million at 31 December
2021 (2020: DKK 84 million).
Domination and profit/loss transfer agreement
H+H International A/S’ subsidiary H+H Deutschland GmbH has on 31 December 2021 entered into a Domination and profit/loss transfer
agreement (“DPLTA”) with Anacon Beteiligungs GmbH and LCB Beteiligungs GmbH. H+H Deutschland GmbH, and H+H International A/S
ultimately as guarantor, are hereby for a 20 year’s period obliged to pay an annual consideration of EUR 0.89 million for the first 10 years
and EUR 0.82 million for the 10 years following, and for this, obtains the rights related to minority shareholding of 47.5% of DOMAPOR
Baustowerke GmbH & Co. KG.
Other
The H+H Group is not a party of any material legal procedings.
Shares in some subsidiaries as well as some specific land and buildings have been pledged as security for a loan agreement with Nordea
Danmark, branch of Nordea Abp, Finland.
24 Auditors’ remuneration
Group Parent company
(DKK million) 2021 2020 2021 2020
Total fees for the parent company’s auditors elected at the annual general
meeting:
Deloitte 3.5 3.4 1.1 1.0
Total 3.5 3.4 1.1 1.0
The total fee can be broken down as follows:
Statutory audit 1.8 1.7 0.7 0.7
Other assurance engagements 1.2 1.1 0.0 -
Tax and VAT services 0.3 0.3 0.0 -
Other services 0.2 0.3 0.4 0.3
Total 3.5 3.4 1.1 1.0
A few Group enterprises are not audited by the Parent’s appointed auditors (Deloitte) or the auditors’ foreign aliates.
The fee for non-audit services delivered by Deloitte Statsautoriseret Revisionspartnerselskab to the Group amounts to DKK 0.3 million (2020:
DKK 0.3 million) and consist of other assurance engagements related to the tax assistance and advisory, advisory services related to transfer
pricing and sundry accounting advisory.
Financial statements
91 | H+H Annual Report 2021
note 23-24
Notes – Supplementary information
25 Business combinations
H+H International A/S’ subsidiary H+H Deutschland GmbH has on the 14 September 2021 made an agreement with Greisel Vertrieb GmbH
and aliated companies to acquire its aircrete factory located in Feuchtwangen in Bavaria, Germany. Furthermore, on 31 December 2021
H+H Deutschland GmbH acquired 52.5% of the shares in DOMAPOR Baustowerke GmbH & Co. KG (“DOMAPOR”), a manufacturer of
aircrete and calcium silicate blocks located in Mecklenburg-West Pomerania, Germany.
The acquisitions are in line with H+H’s strategy to expand its activities within the German wall-building materials market and further
consolidate and restructure the industry.
Feuchtwangen
Cashflow related to the acquisition of Feuchtwangen amount to DKK 126 million which was paid in cash on the acquisition date. Transaction
costs of DKK 3 million related to the acquisition have been expensed in 2021, recognised as other operating costs, and presented as special
items in the income statement.
The purchase price allocation shows acquired net assets at a fair value of DKK 43 million and related goodwill of DKK 83 million.
DOMAPOR
Cashflow related to the acquisition DOMAPOR amount to DKK 112 million which was paid in cash on the acquisition date. Transaction costs of
DKK 6 million related to the acquisition have been expensed in 2021, recognised as other operating costs, and presented as special items in
the income statement.
The purchase price allocation shows acquired net assets at a fair value of DKK 79 million, including minorities’ share of DKK 38 million, and
related goodwill were consequently determined at DKK 70 million by applying the “Acquired goodwill method”.
The PPA for the acquisition is considered provisional due to the fact that the transaction was closed on 31 December 2021, leaving limited
time to identify and determine fair value of assets acquired and liabilities assumed. Adjustments may be applied to the purchase price
allocation for a period of up to 12 months from the acquisition date.
Valuation method applied for acquisitions
The fair value of customer relations is determined through use of the Multi-Period Excess Earnings method (MEEM). Customer relations are
calculated as the present value of the net cash flow generated by sales to customers after deduction of a reasonable return on all other assets
which contribute to generating the cash flows in question. The fair value of the identified intangible assets is based on the discounted cash
flows that are expected to be generated by the continued use or sale of the assets. An after-tax discount rate of 11.50% has been applied.
The fair value of the acquired land and buildings is recognised on the basis of an internal property valuations.
The fair value of the acquired plant and machinery is estimated on the basis of the depreciated replacement value.
Receivables are valued at the present value of the amounts that are expected to be received less expected costs for collection.
The fair value of the acquired finished goods is determined on the basis of expected selling prices to be obtained in the course of normal
business operations less expected completion costs and costs incurred to execute the sale, and with deduction of a reasonable profit on
the sales eort and a reasonable profit on the completion. The fair value of the acquired raw materials and goods for sale is determined at
replacement cost.
Liabilities are valued at the present value of the amounts that are required for settling the liabilities. The Group’s loan interest rate before tax
is used in the case of discounting of receivables and liabilities. However, discounting is not used when the eect is immaterial.
Accounting eect of acquisitions
Goodwill in the H+H Group was DKK 211 million at the beginning of the year. Due to the acquisitions, additional goodwill of DKK 153 million
was recognised, resulting in goodwill as of 31 December 2021 amount to DKK 364 million. Goodwill represents the value of the existing sta,
access to new markets and expected synergies.
Financial statements
92 | H+H Annual Report 2021
note 25
Notes – Supplementary information
25 Business combinations – continued
The table provides a summary of the purchase price for the two acquisitions and the allocation of the fair value of acquired assets and
assumed liabilities on the acquisition dates.
Feuchtwangen DOMAPOR Total
(DKK million)
14 September
2021
31 December
2021 2021 2020
Customer relations and other intangible assets - 52 52 50
Land and buildings 36 35 71 20
Plant and machinery 19 19 38 14
Financial assets - 0 0 1
Receivables - 17 17 6
Inventories - 18 18 7
Cash - 7 7 8
Acquired assets 55 148 203 106
Financial debt - 28 28 15
Non-current provision 11 - 11 -
Trade payables - 0 0 2
Tax payables - 3 3 4
Other current liabilities 1 9 10 7
Deferred tax - 28 28 19
Assumed liabilities 12 68 80 47
Total identifiable acquired net assets 43 80 123 59
Hereof minority interests' share - (38) (38) (29)
Goodwill in connection with the acquisition 83 70 153 17
Purchase price 126 112 238 47
Movements in cash flow in connection with the acquisition:
Purchase price 126 112 238 47
Of which is cash acquired - 7 7 8
Of which financial debt is acquired - (28) (28) (15)
Net cash flow in connection with the acquisitions 126 91 217 40
The fair value of the assets and liabilities acquired is not considered to be final until 12 months after the acquisition.
Business combinations in 2020 relates to the acquisition of Porenbetonwerk Laussnitz GmbH & Co. KG.
26 Financial instruments and financial risks
H+H’s financial risk management policy
As a result of its activities, H+H is exposed to various financial risks i.e. foreign exchange risks, as well as capital structure and cash flow risks,
bad debt exposure and financial covenants. It is H+H’s policy not to speculate actively in financial risks.
H+H’s financial risk management policy and procedures is thus aimed exclusively at managing the financial risks that are a direct
consequence of H+H’s activities. This note relates exclusively to financial risks directly associated with H+H’s financial instruments.
Foreign exchange risks
H+H presents its consolidated financial statements in DKK. Most of H+H’s products are produced and sold outside Denmark. Sales in
markets outside Denmark account for approximately 90% of revenue, with the UK, Germany and Poland being the largest markets.
H+H’s in- and outflows are denominated mainly in GBP, EUR and PLN, and its principal exposure is currently related to these currencies.
Predominantly the group subsidiaries trade in their functional currency or in EUR. Currency exposure on transaction positions on ordinary
activities is therefore contained within the Group.
H+H’s foreign exchange hedging policy and procedures states that an individual group subsidiary must not take foreign exchange positions.
Instead, Group Finance needs to be consulted, and if relevant, financial instruments in foreign currencies are entered into if the foreign
exchange exposure exceeds certain thresholds, also depending on the character of exposure.
Due to the nature of H+H activities, financial instruments in foreign currencies are only limitedly used. H+H has for 2021 entered foreign
contracts for purchase of EUR paid in CHF, GBP and PLN, these all related to flow of funds from group subsidiaries to Group.
Capital structure and cash flow risks
The H+H Group has significant net interest-bearing debt. An increase in the interest rate level will depress the Group's pre-tax profit. It is
H+H‘s policy to hedge interest rate risks on H+H’s loans if it is assessed that the interest payments can be hedged at a satisfactory level.
Historically, the interest rate has only to a very limited extent been hedged and H+H has therefore benefited from lower short-term rates
compared with long-term rates.
The H+H Group’s liquidity risk is defined as the risk that the H+H Group will not, in a worst-case scenario, be able to meet its financial
obligations due to insucient liquidity. It is the H+H Group’s policy that all surplus funds flow upwards to be managed centrally by the parent
company.
H+H’s capital structure contains a Global Cash Pool arrangement supported by individual loans. Most group subsidiaries participate in the
Global Cash Pool arrangement and the parent company sets limits for all overdraft facilities included herein. H+H aims that financing of group
subsidiaries are management within the Global Cash Pool arrangement, or via intercompany loans from the parent company to the relevant
group subsidiary. If necessary, the parent company may decide to approve that financing of a group subsidiary is obtained externally.
H+H regularly evaluates the capital structure on the basis of expected cash flows with a view to ensuring an appropriate balance between
adequate future financial flexibility and a reasonable return to shareholders.
Financial statements
93 | H+H Annual Report 2021
note 26
Notes – Supplementary information
26 Financial instruments and financial risks – continued
Bad debt exposure
As consequence of it’s ordinary activities, H+H is exposed to the risk of bad debt. This risk is primarily related to receivables in respect of
sales of H+H’s products, which for the majority is invoiced through a number of builders’ merchants across several countries. This reduces
the H+H’s risk of bad debt exposure towards contractors and house builders, but consequently increases it to builders’ merchants.
In line with H+H’s credit risk hedging procedures, all customers are subject to mitigating actions, i.e. credit rating, assessment of payment
terms or credit limits etc., which all constitutes that H+H’s risk of bad debt are at a very low level - which also is supported by the very modest
bad debt losses realised in previous years. The maximum related credit risk corresponds to the carrying amounts recognised in the balance
sheet. The H+H Group does not have any material risks relating to a single customer, business partner or country.
Loan agreements and financial covenants
H+H Group’s financing is a committed credit facility with Nordea Danmark, a branch of Nordea Abp, Finland, which on 4 February 2021 was
extended by one year to mature in April 2024.
H+H Group’s financing is subject to usual financial covenants. These are monitored on a quarterly basis, calculated on basis of budget and
updated financial forecasts data. They furthermore undergo sensitivity testing to ensure that management, if needed, can initiate mitigating
actions to ensure compliance. The financial covenants have been fulfilled in 2021 and are also expected to be fulfilled for 2022.
Parent company’s monetary items and sensitivity
(DKK million) 2021 2020
Position Sensitivity Position Sensitivity
Cash and
receivables
Potential
volatility of
exchange
rate
Hypothetical
impact on
profit before
tax for the
year*
Hypothetical
impact on
equity
Cash and
receivables
Potential
volatility of
exchange
rate
Hypothetical
impact on
profit before
tax for the
year*
Hypothetical
impact on
equity
EUR/DKK 1,028 1% 10 8 813 1% 8 6
GBP/DKK (147) 5% (7) (6) (94) 5% (5) (3)
3 2 3 3
* The hypothetical impact on profit/loss and equity is significant to the parent company’s financial statements but not necessarily to the consolidated financial
statements.
The parent company has significant monetary items in currencies other than the functional currency in the form of loans to subsidiaries. The
table above shows the parent company’s key monetary positions broken down by currency and derived sensitivity.
Monetary items in foreign currency
Group
(DKK million) 2021
EUR GBP PLN Others Total DKK Total
Trade receivables 55 34 23 7 119 27 146
Other receivables 29 - 5 2 36 1 37
Cash 193 118 120 38 469 30 499
Trade payables (64) (113) (56) (10) (243) (8) (251)
Other payables (90) (15) (45) (25) (175) (20) (195)
Credit institutions (195) (12) (2) (12) (221) (522) (743)
Gross exposure (72) 12 45 0 (15) (492) (507)
Hedged via derivative
financial instruments - - - - - - -
Net exposure (72) 12 45 0 (15) (492) (507)
(DKK million) 2020
EUR GBP PLN Others Total DKK Total
Trade receivables 4 43 17 5 69 11 80
Other receivables 18 1 8 1 28 1 29
Cash 198 81 150 30 459 22 481
Trade payables (41) (84) (39) (9) (173) (7) (180)
Other payables (57) (15) (46) (20) (138) (24) (162)
Credit institutions (88) (3) (2) (13) (106) (503) (609)
Gross exposure 34 23 88 (6) 139 (500) (361)
Hedged via derivative
financial instruments - - - - - - -
Net exposure 34 23 88 (6) 139 (500) (361)
Financial statements
94 | H+H Annual Report 2021
Notes – Supplementary information
26 Financial instruments and financial risks – continued
Sensitivity of profit and equity to market fluctuations
Group
(DKK million) 2021 2020
Profit Equity Profit Equity
5% increase in GBP/DKK 6 16 4 11
5% increase in PLN/DKK 8 23 6 24
14 39 10 35
The table above shows the sensitivity of profit/loss and equity to market fluctuations. A decline in the GBP/DKK and PLN/ DKK exchange
rates would result in a corresponding increase in profit/loss after tax and equity. The sensitivity analysis has been calculated at the balance
sheet date on the basis of the exposure to the stated currencies at the balance sheet date. The calculations are based solely on the stated
change in the exchange rate and do not take into account any knock-on eects on interest rates, other exchange rates etc.
Interest rate exposure
Group
(DKK million) 2021 2020
Net
interest-
bearing debt
Interest
hedged
Net
position
Weighted
time to
maturity
of hedging
Net
interest-
bearing debt
Interest
hedged
Net
position
Weighted
time to
maturity
of hedging
DKK 499 - 499 - 489 - 489 -
EUR 30 - 30 - (93) - (93) -
PLN (66) - (66) - (92) - (92) -
CHF (31) - (31) - (25) - (25) -
GBP (88) - (88) - (59) - (59) -
Other 6 - 6 - 10 - 10 -
Total 350 - 350 - 230 - 230 -
The table above illustrates H+H’s interest rate exposure on financial instruments at the balance sheet date. At 31 December 2021, the Group
was not involved in any interest rate swaps.
All other things being equal, based on H+H’s average net interest-bearing debt (expressed by quarter), an increase of 1 percentage point per
year in the interest rate level relative to the average interest rate level in 2021 would reduce profit/loss before tax by DKK 2 million (2020: DKK
4 million).
The interest rate is variable, changing in accordance with the performance relative to the covenants contained in the loan agreement.
H+H’s financial liabilities fall due as follows:
Group
(DKK million) 2021
Carrying
amount 0-1 year 1-5 years
Over 5
years
Non-derivative financial instruments:
Credit institutions and banks 743 - 766 -
Lease liability 106 21 45 40
Trade payables 251 251 - -
Other payables 195 195 - -
Total 1,295 467 810 40
(DKK million) 2020
Carrying
amount 0-1 year 1-5 years
Over 5
years
Non-derivative financial instruments:
Credit institutions and banks 609 - 636 -
Lease liability 102 18 41 43
Trade payables 180 180 - -
Other payables 162 162 - -
Total 1,053 360 677 43
Financial statements
95 | H+H Annual Report 2021
Notes – Supplementary information
26 Financial instruments and financial risks – continued
Other derivatives that do not qualify for hedge accounting
The fair value of those financial instruments that do not qualify for hedge accounting under IFRS 9 is recognised directly in the income
statement. No contracts are entered as at 31 December 2021 (31 December 2020: DKK 0 million).
The fair value of derivative financial instruments to hedge future cash flows is based on observable data (level 2)
Categories of financial instruments
Group
(DKK million) 2021
Carrying
amount Fair value
Carrying
amount Fair value
Trade receivables 146 146 80 80
Other receivables 37 37 29 29
Cash and cash equivalents 499 499 481 481
Total receivables 682 682 590 590
Credit institutions and banks 743 743 609 609
Trade payables and other payables 446 446 342 342
Total financial liabilities measured at amortised cost 1,189 1,189 951 951
Classification and assumptions for the calculation of fair value
Current bank loans at variable interest rates are valued at a rate of 100. The fair value of long-term loans and finance leases is calculated
using models that discount all estimated and fixed cash flows to net present value. The expected cash flows for the individual loan or lease are
based on contractual cash flows. Financial instruments relating to sale and purchase of goods etc. with a short credit period are considered to
have a fair value equal to the carrying amount. The methods are unchanged from last year.
27 Related parties
The Group’s related parties are the Executive Board and the Board of Directors.
Apart from contracts of employment, no agreements or transactions have been entered into between the Company and the Executive Board.
Remuneration to the Board of Directors and the Executive Board is disclosed in note 3.
H+H International A/S has no controlling shareholders. Besides the parties specified above, the parent company’s related parties consist of
its subsidiaries; see note 16.
A management fee totaling DKK 52 million (2020: DKK 47 million) was received by the parent Company from the remainder of the Group.
Transactions between the parent company and subsidiaries also include deposits, loans and interest; these are shown in the parent company
balance sheet and notes 7 and 8.
There were no material unsettled balances with related parties at the end of the year.
Trading with related parties is at arm’s length.
28 Events after the balance sheet date
With reference to note 20 “Pension obligations”, H+H has on 27 January 2022 agreed a new triennial valuation (postponed from April
2020), with the Actuarial certificate signed on 31 January 2021. Consequently, a new repayment schedule has been agreed for obligatory
contributions, which does not impact H+H financial position significantly.
No events have occurred after the balance sheet date that will have a material eect on the parent company’s or the H+H Group’s financial
position.
Financial statements
96 | H+H Annual Report 2021
note 27-28
Statement by the Executive Board and the Board of Directors
Copenhagen, 3 March 2022
Executive Board:
Michael Troensegaard Andersen Peter Klovgaard-Jørgensen
CEO CFO
Board of Directors:
Kent Arentoft Stewart Antony Baseley
Chairman
Volker Christmann Pierre-Yves Jullien
Miguel Kohlmann Helen Macphee
Financial statements
97 | H+H Annual Report 2021
statement by bod
Independent auditors’ report
Financial statements
98 | H+H Annual Report 2021
independent auditors rep
Financial statements
99 | H+H Annual Report 2021
• Identify and assess the risks of material misstatement of the consolidated financial statements and the parent
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
• Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing
• Evaluate the overall presentation, structure and content of the consolidated financial statements and the
• Obtain sucient appropriate audit evidence regarding the financial information of the entities or business
Financial statements
100 | H+H Annual Report 2021
• The preparing of the annual report in XHTML format;
• The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and
• Ensuring consistency between iXBRL tagged data and the consolidated financial statements presented in
• For such internal control as Management determines necessary to enable the preparation of an annual report
• Testing whether the annual report is prepared in XHTML format;
• Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging
• Evaluating the completeness of the iXBRL tagging of the consolidated financial statements;
• Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and
• Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and
• Reconciling the iXBRL tagged data with the audited consolidated financial statements.
Business Registration No 33 96 35 56
State-Authorised State-Authorised
Public Accountant Public Accountant
MNE no mne21358 MNE no mne45103
Financial statements
101 | H+H Annual Report 2021
Contact information
Group Head Oce
Telephone: +45 35 27 02 00
E-mail: info@HplusH.com
www.HplusH.com
Company Reg. No.: 49 61 98 12
H+H Benelux
Magnesiumstraat 1 A
6031 RV Nederweert
Netherlands
Tel.: +31 49 54 50 169
www.HplusH.nl
H+H Denmark
Skanderborgvej 234
8260 Viby J
Denmark
Tel.: +45 70 24 00 50
www.HplusH.dk
H+H Germany
Klaus-Bungert-Straße 6a
40468 Düsseldorf
Germany
Tel.: +49 45 54 70 00
www.HplusH.de
H+H Sweden
Mobilvägen 3
246 43 Löddeköpinge
Sweden
Tel.: +46 40 55 23 00
www.HplusH.se
H+H Czech Republic
Beroun-Město 660
26601 Beroun
Czech Republic
Tel.: +420 311 644 705
www.VAPIS-sh.cz
H+H Switzerland
Aarauerstrasse 75
5200 Brugg
Switzerland
Tel.: +41 56 46 05 466
www.hunziker-kalksandstein.ch
H+H UK
Celcon House, Ightham
Sevenoaks, Kent TN15 9HZ
UK
Tel.: +44 17 32 88 63 33
www.HplusH.co.uk
H+H Poland
ul.Kupiecka 6
03-046 Warsaw
Poland
Tel.: +48 22 51 84 000
www.HplusH.pl
Financial statements
102 | H+H Annual Report 2021
contact information
1909
Henriksen &
W. Kähler established
joint gravel pit
enterprise
1937
Business
expanded with
Danish Aircrete
and Rockwool
Partnership
2011
Michael T. Andersen is
appointed CEO of H+H
2021
Acquisitions of one
AAC factory and
one combined AAC
and CSU factory in
Germany
2000
Focus on
aircrete—expansion to
Finland and Germany
2019
Divestment of the
Russian business
and acquisition of
one CSU factory in
Germany
1958
H+H enters the
UK—joint venture
with Celcon
1962
Henriksen & W. Kähler
divided Rockwool
activities from the
other activities
2009
Opening of factory
near St. Petersburg,
Russia
1985
H+H’s B shares listed
on the Copenhagen
Stock Exchange
2017
H+H enters the CSU
markets through
acquisitions in
Germany, Switzerland
and Poland
2019
Peter Klovgaard-
Jørgensen is
appointed CFO
2005
Expansion into
Poland
2015
Restructuring of the
Polish aircrete market
2020
Acquisition of
one AAC factory
in Germany
2013
Kent Arentoft is
appointed
Chairperson of the
Board of Directors
H+H as a
conglomerate
190 9–1998
H+H as a
consolidator
199 8–2021
H+H as a Partner
in Wall Building
2022
Turnaround
2011–2015
Restructuring
of the European
white-stone
markets
2015–2021
More than 100 years
of experience
103 | H+H Annual Report 2021
more than 100 years of exp
